Nickel on MCX settled up 1.17% at 710 as prices recovered on short covering after prices slipped as major producer Indonesia eased a ban on ore exports, potentially offsetting lower supply from Philippines. Indonesia introduced new rules that will allow exports of nickel ore and bauxite and concentrates of other minerals under certain conditions in a sweeping policy shift by the big global supplier. The drop in prices had opened a window for Chinese traders to import, which cushioned losses. LME stocks stand at 370,866 tonnes – in the three years between 2006 and 2008, they averaged 28,856 tonnes. It looked as though the Indonesian ore export ban would give the nickel industry the opportunity to reduce global stocks but the combination of stockpiling ahead of of the Indonesia ban, the massive effort by the Philippines to plug the gap left by the halting of Indonesian exports and the destocking of off-market nickel stockpiles in China after the Qingdao Port scandal have meant nickel stocks have not been drawn down much – indeed, they are higher today than the 260,000 tonnes in LME-bonded warehouses when the ban was imposed in January 2014. Given a large net long money managers’ position in nickel, the market is at risk of stale long liquidation should the fundamentals turn more bearish. The combination of high stocks and the likelihood that Indonesia will export some nickel ores to China are likely to keep a cap on nickel prices for longer. Technically market is under short covering as market has witnessed drop in open interest by -3.31% to settled at 15567 while prices up 8.2 rupee, now Nickel is getting support at 693.4 and below same could see a test of 676.8 level, And resistance is now likely to be seen at 719.7, a move above could see prices testing 729.4.

Trading Ideas:

Nickel trading range for the day is 676.8-729.4.

Nickel prices recovered on short covering after prices slipped as major producer Indonesia eased a ban on ore exports.

Indonesia also introduced new rules that will allow exports of nickel ore and bauxite and concentrates of other minerals.

The increase in ore shipments was likely to depress global nickel prices.