Nickel prices on the London Metal Exchange (LME) are rising again today to their highest levels in nearly three weeks (since Dec. 8) as traders expect a large short position maturing in January to be liquidated, potentially supporting the bullish momentum. Data collected daily and published by the LME with a one-day lag shows that one fund holds a huge short position of 20-29% of the total 'open interest' in nickel contracts, with those contracts due to settle in January. Kingdom Futures Chief Executive, Malcolm Freeman in his latest memo reported that the nickel market is expecting another significant event in the form of the settlement of the said open short position amounting to 23,400 metric tons of pig iron, in Freeman's view the entity holds up to 30% of all nickel contracts. In his note, Freeman also referred to the huge spikes in nickel prices in March, when they hit a record high above $100,000 per metric ton in OTC trading, prompting the LME to suspend nickel trading for more than a week. In December, nickel prices gained leaving forecasts for Q1 2023 more bullish. While volumes are still stable, nickel contracts are historically volatile and have shown this in 2022. The speculative price rally may be supported by a production cut by one of the world's largest producers, Russia's Norilsk Nickel. The company reported planned production cuts.
NICKEL price chart, D1 interval. Looking at nickel prices, we see some signs of bullish Three Rising Valleys formation building up. This indicates a possible breakout of the next peak. If the bulls maintain momentum the key battle between demand and supply will likely play out at the $33,000/ct levels. A potential breakout above will be a confirmation of the previously mentioned upward formation. Source: xStation5
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