Nickel Prices Climb as China Backs Infrastructure and Fed Rate Cut Outlook

On August 4, nickel prices rose due to a mix of global economic signals and policy developments. Futures prices on the London Metal Exchange (LME) increased by US$79 per ton, closing at US$15,066/ton, while the spot price rose US$71 per ton to US$14,865/ton. Despite the price movement, nickel inventories monitored by the LME remained unchanged at 209,082 tons, indicating that the supply side hasn't shifted significantly.

There were two main reasons for this price uptick:

1. China's Infrastructure Support:Chinese authorities announced plans to extend and intensify infrastructure investment to stimulate economic growth. This typically boosts demand for industrial metals like nickel, which is a key input in stainless steel production. The news improved overall market sentiment, especially in metals markets.

   
   

2. Increased Expectation of a U.S. Fed Rate Cut:Weaker-than-expected U.S. employment data led investors to believe that the Federal Reserve may cut interest rates as early as September. A potential rate cut would weaken the U.S. dollar, which usually supports commodity prices like nickel, since they’re priced in dollars and become cheaper for buyers using other currencies.

   
   

Additionally, China's stainless steel market has shown signs of strengthening, adding upward pressure on nickel prices. However, it's worth noting that domestic demand in China remains weak, so while sentiment has improved, there may still be short-term volatility in nickel prices depending on how the actual demand unfolds.

Click here to read the full news article from Yieh Corp.