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Nickel

LME and MCX Nickel futures mainly traded bullish during the month of August and September, as demand has witnessed incline in US and the European countries. This has also increased the raw material/output demand in the manufacturing sectors from Philippines and Indonesia for its electronic vehicles car manufacturing sector. However, rising US dollar index amid worries of rising delta variant virus cases in the said countries has capped upside movement on the base metal prices. By 12th September, MCX Nickel prices inclined by 2.05% closing at Rs.1540/kg. Fundamentally for the month ahead, we are expecting LME and MCX Nickel futures to witness uptrend with reports of higher demand from the battery sector in China. Stainless demand is strong in North America and Europe as well. Like all semi-finished metal prices this year, a part of that price strength is due to a number of factors. The global recovery, widespread logistics delays and rapid supply chain restocking have all played a part. That last factor is, no doubt, self-fulfilling. As prices rise, consumers along the value chain tend to overbuy to avoid further prices rises. Macquarie analyst Jim Lennon expects nickel consumption to grow 17% this year to 2.8 million tonnes. He further added that Stainless steel production, the main use of nickel, is set to grow by 16% this year, adding 250,000 tonnes to nickel demand. Nickel used in batteries is set to grow by 100,000 tonnes this year to around 290,000 tonnes. Both the LME and, particularly, the SHFE are experiencing front-month squeezes. Nickel stocks in warehouses monitored by the Shanghai Futures at 8,608 tonnes have more than halved since the end of last year. They fell to a record low of 4,455 tonnes in August. In LME registered warehouses, stocks at 179,394 tonnes have tumbled more than 30% since mid-April. Current Month September Price for prompt delivery are higher than the months ahead eventually forming a backwardation.

On a weekly chart, MCX Nickel (Oct) future has been rising continuously in a bullish channel with Higher Highs and Higher Lows formation from the last couple of weeks . In addition, the price has been trading above 50 Exponential Moving Averages, which point out positive trend for near future. Moreover, an oscillator Stochastic RSI suggested also positive crossover, which is again an upside confirmation. However, on a four hourly chart, the indicator MACD suggested negative crossover, which indicates some correction in the counter till the level of lover band of channel. Hence, based on above technical structure we are recommending buy on dip strategy in MCX Nickel (Oct) around 1405 or a fall in the price till 1395 levels, that can be used as buying opportunity for the upside target of 1490 . However, the bullish view will be negated if MCX Nickel (Oct) future close below the support level of 1369.

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