FX.co ★ Nickel Eases from 2-Month High

Nickel futures have declined to below $15,200 per tonne, reversing the rally that peaked at $15,640 on July 24th, a two-month high. This decline comes amid ample supply and the Chinese government's measures to reduce industrial capacity, thereby limiting demand for nickel used in industrial alloys. Beijing has intensified its commitment to curbing capacity at steel mills, decreasing the output of finished steel, and thus reducing nickel demand for stainless steel production. Meanwhile, the available nickel stockpiles at London Metal Exchange (LME) warehouses have increased by 40,000 tonnes this year, reaching a total of 190,000 tonnes, which aligns with strong output from Chinese refiners in Indonesia. The Indonesian government has cut its nickel mining quotas by 120 million tons to 150 million this year, which reduces global supply by 35% from current levels. However, throughout the year, low bidding prices suggest that the market does not perceive these constraints to significantly alter the prevailing oversupply situation.