Nickel - the metal for 2007?

[BREND]

Consumers had already stopped buying nickel when it was $33,000mt. But price keeps rising, and inventory keeps falling, guess who is manipulating the market?

 

[rederob]

Consumers had already stopped buying nickel when it was $33,000mt. But price keeps rising, and inventory keeps falling, guess who is manipulating the market?

I reckon Norilsk Nickel is.
I suspect it is they that continue to deliver into Asian LME warehouses, where demand is not as strong as in Europe.
Some nickel is available in the US and most European nickel is cancelled.
Norilsk have been master nickel price manipulators for years, previously where they hoarded inventory and now where they deliver to remote locations.
The present impact is to squeeze European physical buyers to pay higher prices and move out the backwardation.
With backwardation approaching $3k/tonne, each 6tonne LME lot delivered gives a spot reward of over $15k over forward delivery (3 months out).
Norilsk are proven masters of this game, and while "funds" may be playing their part in keeping nickel artificially higher, Norilsk is ensuring the ride to the top is maintained for as long as possible.

 

[BREND]

I reckon Norilsk Nickel is.
I suspect it is they that continue to deliver into Asian LME warehouses, where demand is not as strong as in Europe.
Some nickel is available in the US and most European nickel is cancelled.
Norilsk have been master nickel price manipulators for years, previously where they hoarded inventory and now where they deliver to remote locations.
The present impact is to squeeze European physical buyers to pay higher prices and move out the backwardation.
With backwardation approaching $3k/tonne, each 6tonne LME lot delivered gives a spot reward of over $15k over forward delivery (3 months out).
Norilsk are proven masters of this game, and while "funds" may be playing their part in keeping nickel artificially higher, Norilsk is ensuring the ride to the top is maintained for as long as possible.

Noted, I think nickel is at bubble stage now.

Pricing is based on manipulation rather than based on fundamental supply and demand.

Few weeks ago, I heard that 2 funds are holding 70% of Nickel inventory at LME warehouse. By manipulating the flow of inventory, which is so low now, basically they are also controlling the nickel price.

 

[Halba]

I have taken a contrarian view and my fund has liquidated 1/4 of my nickel holdings today.

Mainly they were in AGM.

I've had a nice run and its time to move on.

 

[rederob]

Noted, I think nickel is at bubble stage now.

Pricing is based on manipulation rather than based on fundamental supply and demand.

Few weeks ago, I heard that 2 funds are holding 70% of Nickel inventory at LME warehouse. By manipulating the flow of inventory, which is so low now, basically they are also controlling the nickel price.

I will check over the next few days, but I think that there are three players with their hands up for well in excess of 100% of on warrant metal.
These data are always 2 days old from LME.

 

[rederob]

Few weeks ago, I heard that 2 funds are holding 70% of Nickel inventory at LME warehouse. By manipulating the flow of inventory, which is so low now, basically they are also controlling the nickel price.

Here's the info I was after:

 

[BREND]

Here's the info I was after:

Is that from Reuters? That's not what I see in bloomberg.

 

[Kauri]

Nothing concrete but going through the nickle stocks I get the feeling that nickle may be ready to pause/correct a bit?? Maybe a bit of a blow-off?? ( Its almost certain to set new highs now I've said that ).

 

[rederob]

Nothing concrete but going through the nickle stocks I get the feeling that nickle may be ready to pause/correct a bit?? Maybe a bit of a blow-off?? ( Its almost certain to set new highs now I've said that ).

Kauri
Remember what copper did last year: It went higher and higher and higher hitting an RSI in the high 80s and holding for days.
That happened some months after coppers inventory had bottomed.
Nickel inventories remain near historical lows, with the proportion of cancelled warrants representing about 40% of total LME metal.
So although I agree we are very close to that blow off, we could still be weeks away.
Definitely not a market I would touch with the proverbial barge pole
at present.

 

[Kauri]

Red,
Only posted that to see if you were still awake.. . Must admit it is a long time since I have looked at an RSI, or any indicator other than price and vol, for a long long time. Seems that nickle keeps moving up but the likes of MCR seem to have hit a wall. Maybe its the New Moon affect in China, maybe not.

 

[rederob]

Kauri
Hard to get a decent take on LME traded volumes, so I look for something that gives a better clue to near term price action.
We also have an active spot trade outside of LME that complicates things.
What's awake?
An Irish shindig?

 

[Kauri]

Kauri
Hard to get a decent take on LME traded volumes, so I look for something that gives a better clue to near term price action.
We also have an active spot trade outside of LME that complicates things.
What's awake?
An Irish shindig?

Red,
Sorry for the misunderstanding, I don't even chart nickle as such as it is not something I can trade. All of my musings come from nickle share prices/vols.
Irish shindig, Sweet Mother MacReady, and to think I refrained from asking if you were alert. :

 

[Halba]

If supply comes nickel could retrace from $19/lb heady levels to $15/lb in amatter of weeks. I wouldn't want to be in nickel companies then, coz then analysts will be talking about 13,12,11$/lb which will dramatically reduce nickel stock profits.

 

[rederob]

If supply comes nickel could retrace from $19/lb heady levels to $15/lb in amatter of weeks. I wouldn't want to be in nickel companies then, coz then analysts will be talking about 13,12,11$/lb which will dramatically reduce nickel stock profits.

True, Halba.
But this is not a cargo cult and nickel won't be falling from the sky.
The change is more likely to be from less demand than more supply as new nickel mines and brownfield ramp-ups take a fair bit of planning.
The likely culprit for a sharp correction will be funds exiting with fat profits, no doubt to re-enter once their avaricious carnage has has killed the price for mere mortals.

 

[Halba]

impossible to pick the top. the scenario i posted is more likely to happen from a tail off in demand which seriously crippled both ZINC and copper(both did not suffer from supply increases, how can supply come on so quick?)

 

[rederob]

impossible to pick the top. the scenario i posted is more likely to happen from a tail off in demand which seriously crippled both ZINC and copper(both did not suffer from supply increases, how can supply come on so quick?)

Zinc and copper have experienced similar, but time-shifted fates.
Over a year ago, copper suffered an inventory increase via Chinese SRB sales.
Zinc suffered a similar fate several months ago when local tax rebates made deliveries to LME more profitable than selling into the market.
It is fair to say that zinc, copper and nickel production is increasing across the globe.
So too is demand.
And the battle lines are drawn at the point of imbalance.
Nickel is sensitive to stainless steel output. Recent orders have slowed, but demand is still robust.
We had an event horizon that showed a few months of strong nickel demand, and presently we have fog.

 

[michael_selway]

Zinc and copper have experienced similar, but time-shifted fates.
Over a year ago, copper suffered an inventory increase via Chinese SRB sales.
Zinc suffered a similar fate several months ago when local tax rebates made deliveries to LME more profitable than selling into the market.
It is fair to say that zinc, copper and nickel production is increasing across the globe.
So too is demand.
And the battle lines are drawn at the point of imbalance.
Nickel is sensitive to stainless steel output. Recent orders have slowed, but demand is still robust.
We had an event horizon that showed a few months of strong nickel demand, and presently we have fog.

Hi Red, whats happening to Nickel really gives me confidence of what can happen to zinc (and evenlead maybe) later thsi year!

thx

MS

 

[BREND]

Hi Red, whats happening to Nickel really gives me confidence of what can happen to zinc (and evenlead maybe) later thsi year!

thx

MS

Hmm, a bit different.

There is a lot of zinc in China, zinc suppliers are just waiting for LME zinc price to rise much higher, then they export.

While for nickel, supply is really limited, but then again, there is not much demand at current price, consumers are not buying, only funds are buying. Do you call that a bubble?

 

[YOUNG_TRADER]

Quote
Nickel is clearly the “bull in the china shop”, as it surges forms strength to strength. We are currently at a new high of $43,000, up $1000/MT, and are looking for another two days of closes above $42,200 (the recent intraday high) before adjusting our trading bands higher.

Sooner or later, steel manufacturers will have to start buying nickel again won't they?

I mean they need to galvanize the steel so it doesn't rust, how long can they continue to draw from their own stockpiles?

 

[Kauri]

Quote
Nickel is clearly the “bull in the china shop”, as it surges forms strength to strength. We are currently at a new high of $43,000, up $1000/MT, and are looking for another two days of closes above $42,200 (the recent intraday high) before adjusting our trading bands higher.

Sooner or later, steel manufacturers will have to start buying nickel again won't they?

I mean they need to galvanize the steel so it doesn't rust, how long can they continue to draw from their own stockpiles?

The picture is the same but Nickle = stainless.. Zinc = galvanising..