[ferro-alloys.com]On June 18^th, the last day of Chinese Dragon Boat Festival vocation, LME nickle price went down further. The good news that made nickel price went up before seemed to be uesless. The reason was very simple: U.S. had started the global trade war. It’s not correct that the trade war could be prevented by negotitation. On June 18^th, the LME price was under 15000USD/T

Although the nickle department manager from Sumitomo predicted that a global nickel market deficit to widen to 88,000 tonnes this year.It may be at the view of nickle mining companies. After all, the nickle price was so high that the price broke away from fundamentals seriously.

The LME nickle inventory had decreased from 470376 tons on June 4^th in 2015 to 276312 tons on June 14^th in 2018. The decreased amount was 194064 in three years. In other words, the inventory declined 65000 tons every year. The decreasing rate was really fast.

Based on background analysis, the situation was different. Since January 20^th in 2014, Indonesia started to restrict nickle ore export. There were not enough ferronickle smelting capabilities at that time. On the contrary, the ferronickle industry was in poor condition. The uniform execution for environmental protection policy and prohibition of automobile transportation in Tianjin striked Chinese ferronickle industry. Even in relatively advantageous region Ulanqab, the ferronickle production could not product ferronickle,

Since 2017, some Chinese enterprises (like Qsingshan, Dragon, Xinxing and so on) invested large scale ferronickle projects in Indonesia had started their production, some even had reached their designed capabilities. It had released the shortage of nickle supply in a certain extent. Although Chinese media reported that some Chinese firms invested small blast furnace process had come to the end, the trend of ferronickle production increasing had been confirmed. What’s more, on April 18^th, the LME nickle price used to reach 16690USD/T. It may stimulate global nickle production.

To the hot issued nickle requirement for new energy automobile battery，it was proved that the automobile technology was not mature. The industry development could not go on by government subsidies. The engineers should find out a new way to reduce the cost, including cheap and reliable new energy battery. 

If the trade war does not exist, the global nickle inventory is about 0.4 million tons, including nickle inventory in Shanghai Future Exchange(26036 tons, data on June 14^th, 2018), and recessive MLE nickle beans inventory(90-110 thousands tons). The nickle supply is suffcient. People doesn’t need to be worried in this year and next year 

It should be noticed that the price of stainless steel product did not follow the rising nickle price. Qsingshan 3 million tons stainless steel project in Indonesia will reach the design capability. It keeps pressures on domestic stainless steel industry.If the domestic environmental protection policy is too extreme, the stainless production in Indonesia may keep increasing. Qsingshan 3.5 million tons carbon steel project has started. Based on ferronickle production, it’s possible for Chinese enterprise like Dragon to develop stainless steel smelting industry in Indonesia. Taiwan E-united, Shanxi Jianbang and another enterprise have announced that they would invest in Indonesia steel industry. Guangqing metal and Bao steel Desheng are experienced in carbon and stainless steel smelting switching.

Three to five years later, Indonesia stainless steel will become a highlight in the world. It will change the Chinese stainless steel market situation, even nickle supply market pattern. Although 200 series stainless steel made great contribution to stainless steel industry expansion in history. Some people still disagree with it.Some stainless steel smelting firms paid attention to the development of 400 series stainless steel. The phenonmenon showed that 300 series stainless steel products will occupy half of the stainless steel production quantity. In other words, stainless steel production growth will not keep pace with nickle requirement growing .

Last week, Chinese Central Bank went on issuing more money. They had issued more than 240 billion RMB in a week. On Friday, Central Bank issued 100 billion. Although Chinese government adjusted economy policy slightly for uncertainty from U.S, it did not change the decling trend of nickle price. So, the trade war caused by U.S.could not make traders be optimistic in staple commodity market. The interest rate of dollar increasing, and uncertainty of Trump shows that U.S will influence global economy and  staple commodity market for a long time.

In conclusion, the nickle price will keep its declining trend through macroscope economy analysis and nickle price trend observation.  

• [Editor:王可]