Technically Nickel market is getting support at 782.5 and below same could see a test of 776.3 level, And resistance is now likely to be seen at 795.7, a move above could see prices testing 802.7.
Nickel on MCX settled down 0.43% at 788.60 dropped in the line of expectation on long liquidation tracking both LME nickel and the SHFE contract which declined below the five-day moving average, and settled lower overnight as the US dollar bounced back from a three-month’s low.
Nickel prices are stabilising at around 785 while sentiments remain firm as continued production deficit that has significantly reduced LME nickel stockpiles to around 200,000 tonnes, down from 368,000 tonnes a year ago.
The ongoing production deficit of over 110,000 tonnes per annum is likely to stay around that level for the next few years even with further increases in lateritic nickel output in the form of Asian nickel pig iron and the planned increase in high purity material from several major sulphide producers.
Nickel demand is forecast to increase strongly over the next few years from its role as a key ingredient in new generation batteries, particularly for the forecast strong rise in electric vehicle (EV) production.
Last night the US dollar rebounded from three-month lows, extending gains against the euro and yen, after Federal Reserve Chairman Jerome Powell said that the US central bank intends to further shrink the balance sheet, suggesting it is not done tightening monetary policy.
The Fed chairman also said he sees no near-term risk of a US recession and expects continued momentum in economic data. However, he reiterated that the Fed can be patient on monetary policy and can move "flexibly and quickly" if economic data warrants it.
--Nickel trading range for the day is 776.3-802.7.
--Nickel dropped as optimism over U.S.-China trade talks faded and poor China data weighed.
--China's producer price index (PPI) in December rose at its slowest pace in more than two years.
--China produced some 15,800 mt of nickel in Dec, 4.45% higher than Dec 2017
Courtesy: Kedia Commodities