Nickel prices staged a strong recovery over July and into early August. On August 9, the nickel price had traded to an intraday high of US$10,835/tonne, a five-month peak. Some of this strength can be attributed to speculative interest increasing when nickel prices fell below US$9,000/tonne; they bottomed out at US$8,680/tonne in mid-June. The price decline prompted debate about potential supply cuts, increasing positivity over market prospects. As prices recovered and breached upward trend resistance, this helped momentum and was aided by U.S. dollar weakness and robust stainless steel output, with Chinese production exceeding earlier expectations.
Focus remains on the Philippines and Indonesia. Ore supply growth from Indonesia continues apace after the relaxation of the country's mineral export ban in January. PT Antam, Indonesia's largest state-owned nickel mining company, reported robust operational results for the first half, with 275,513 wet tonnes of nickel ore shipped. Meanwhile, Vale Indonesia reportedly said the country's recent shift in policy allowing nickel ore to be exported is helping to keep metal prices low and hampering efforts for partnering in new smelter investments.
In the Philippines, the market has taken delays in deciding whether to overturn the previous recommendations for mine suspensions and closures as a sign the new Environment Minister, Roy Cimatu, may not be as favorable toward the extractives industry as anticipated, helping to underpin prices. Our current view is that the crackdown on the mining sector will alleviate and the Philippines ore supply will remain largely healthy, which would dampen some of the recent nickel price gains. Factors that could counteract this include Chinese stainless steel production remaining high or if operations such as Vale's loss-making nickel plant in New Caledonia are forced to close.
