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Citi: Nickel prices may soar to US$20,000 per ton, Indonesian supply risks and China’s policy impact

According to foreign reports on October 26, Citi, a world-renowned investment bank, predicted in its latest report that the nickel price on the London Metal Exchange (LME) may rise to about US$20,000 per ton in the future. The forecast is based on several factors, including tight short positions among funds, supply risks in top producer Indonesia and the possibility of further policy easing in China.

Citi analysts said in a report that short positions in the nickel market are currently tight, which means that many investors hold short positions in the nickel market, that is, they predict that nickel prices will fall. However, if market conditions change, these short positions could be covered, pushing nickel prices higher.

In addition, Citi also pointed out that as the world’s largest nickel producer, Indonesia’s supply risks are increasing. Nickel supply in Indonesia faces a number of challenges due to declining ore grades, tight regulatory scrutiny, delays in the issuance of mining quotas and increasing pressure to address environmental, social and governance (ESG) issues. These factors may support nickel prices.

On the other hand, Citi expects that China may further relax its policies, which will help stimulate economic growth and thereby increase demand for base metals such as nickel. This increase in demand could further push nickel prices higher.

Despite these potential upside factors, Citi cautioned investors to be aware of some factors that could hinder nickel price gains. For example, while the current oversupply in the spot nickel market has been reasonably priced, the oversupply in the refined nickel market may increase in the coming years, which may put pressure on nickel prices.

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