Nickel yesterday settled down -2.65% at 844.10 as pressure seen after China's producers of nickel-pig-iron are racing to upgrade their facilities as reduced demand from stainless steel mills and weaker nickel prices drive them to cut costs. That could boost low-cost capacity and weigh further on prices in the world's top consumer, in turn pressuring London Metal Exchange nickel prices that have already fallen 12 percent so far this year. Some mining companies have stepped up their hedging of industrial metals as prices have fallen, but many others are holding back, wary about shareholder opposition to the practice. Increasing low-cost capacity of Ferro-nickel is likely to continue to weigh on prices amid weak demand. Appetite for nickel-pig-iron and refined nickel are expected to fall further in the next three months as stainless steel mills slow production for maintenance work. Apparent consumption of stainless steel fell nearly 2 percent to 3.33 million tonnes in the first quarter of the year, from the previous quarter, according to data from an industry body. Production of stainless steel also dropped near 2 percent to 4.41 million tonnes in the first quarter from the quarter before, the data showed. Meanwhile, weak demand has cut imports of nickel ore in May from April, trade sources said. Stocks of nickel ore at China's seven main ports stood at about 16.38 million tonnes last Friday versus about 16.89 million tonnes in late February and a record 18.2 million tonnes at the end of December 2012. Now Nickel is getting support at 832.1 and below same could see a test of 820.2 level, And resistance is now likely to be seen at 867, a move above could see prices testing 890.

Trading Ideas:

Nickel trading range for the day is 820.2-890.

Nickel dropped as pressure seen after China's producers of nickel-pig-iron are racing to upgrade their facilities as reduced demand from stainless steel mills.

Some mining companies have stepped up their hedging of industrial metals as prices have fallen, but many others are holding back

Technically market is under fresh selling as market has witnessed gain in open interest by 18.78% to settled at 12374.