Goldman Sachs predicting lower prices for nickel

Anyone looking for a recovery in nickel prices soon is likely to be disappointed as supply growth will more than offset demand in the next three months to a year, according to an analysis by Goldman Sachs Group Inc.

Nickel, used in stainless steel to prevent corrosion, has slumped more than 9 percent in 2017, making it the worst performer on the London Metal Exchange, on prospects for increasing supply from the Philippines and Indonesia. Prices are going to stay at “very low” levels through 2017 and much of next year until they cut into supply and eradicate the surplus, analysts including Jeffrey Currie and Yubin Fu wrote in a report dated May 29.

Goldman Sachs forecasts nickel at $9,000 a metric ton in three, six and 12 months, which compares with an LME close Friday of $9,080, and is 28 percent to 18 percent below its previous predictions for those periods. The bank sees a global surplus of 37,000 tons this year and about 100,000 tons in 2018.

Technically, the price is in a strong bearish movement, currently forming a flag formation, that has not activated. If the price goes below $8946, we will probably see a sale of the metal. 50 and 200SMA are in a bearish position, and CCI indicators show that the downward impulse is still on the move.

We're waiting for a $ 8946 breakthrough to get a short position on the trend with a stop at around $9500.

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov

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