Nickel prices gain resistance after strong gains

Nickel prices hit an annual high in early August and rose more than 10% in the third quarter as the Philippines restrains mining by shutting down mines that do not meet international standards. So far, the crackdown has resulted in the suspension of operations at eight mines. At the same time, after Indonesia banned the supply of rough raw materials in 2014, the Philippines has become the preferred supplier of metal to China.

While the price spike has already triggered a big adjustment in the nickel market, the full impact and full impact may not be fully felt until next year, according to a nickel market report released by investment bank UBS. The shut down mines produced 2.6 million tonnes of ore in 2015, or 8% of the country's total production and 2% of global supplies.

The global nickel market swung into a deficit of 42,600 tonnes between May and June this year, with an astonishing adjustment against the backdrop of a market surplus of 45,000 tonnes in 2015. The deficit appears to have deepened further since July. While the nickel market faces supply challenges, nickel demand has been relatively strong thanks to better-than-expected demand for stainless steel as China has increased infrastructure spending to boost its economy. While the run-up in nickel prices may have some impact on traders' positions, the full impact of the Philippine supply restriction may be seen in a few months.