While the fog of the trade war clouds the outlook for most commodities, battle lines are being drawn in the nickel market. On either side, traders and investors are lining up to bet on two diametrically opposed paths for prices.
The catalyst: Indonesia’s surprise move in late August to bring forward a ban on exports of unrefined ore. That’s set up conditions for a supply shortage, which triggered a rush to pull inventory out of warehouses. Freely available stockpiles on the London Metal Exchange are now the lowest in more than 12 years.
On one side, some traders are betting this is the start of a long-term, structural deficit that will propel prices sharply higher. Others argue there’s plenty of nickel available in the wider physical market and the market is about to nosedive.
“The Chinese speculative community is trading this from the short side,” said Ingrid Sternby, a commodities strategist at Valent Asset Management, in an interview in London. “Talking to our network of contacts in the market leads us to the conclusion that the nickel price doesn’t belong up here.”
As the metals industry gathers in London for LME Week, the nickel market will be one of the main topics of conversation. Here’s what you need to know:
Inventory is disappearing…
For the rest of this article: https://www.bloomberg.com/news/articles/2019-10-27/the-big-question-in-metals-is-what-happens-next-to-nickel