Mumbai, 21 Nov (Commoditiescontrol): Nickel is anticipated to experience a significant surge in buying during the annual re-balancing of commodity indexes in January, as predicted by analysts. This comes after a notable price decline in 2023 due to concerns about oversupply. The re-balancing, occurring from January 8-12, 2024, involves funds like the S&P GSCI and Bloomberg commodity indexes adjusting their holdings based on the previous year's price movements. Traders often position themselves beforehand to capitalize on this event.
Nickel, having fallen 44% this year on the London Metal Exchange (LME) to $16,710 per metric ton, is expected to be the most affected commodity, mainly due to its poor performance. Analysts from Societe Generale noted that nickel's short positions are at a record high, indicating potential exaggerated market moves. Alongside nickel, soy oil and lean hogs are also set to benefit, while WTI crude oil, lead, and sugar may see selling pressure.
Investors are projected to buy around 9,974 nickel contracts valued at $1.033 billion, although the final amount depends on December's closing prices. The LME's nickel volumes have improved this year, yet they remain below pre-March 2022 levels, when a price spike disrupted trading.
Overall, investment in commodity index-based funds and ETFs has declined since peaking in early 2022, challenging the notion of a sustained commodity boom. Commodities assets under management have decreased by 35% since their peak, now standing at $930 billion.
(By Commoditiescontrol Bureau; +91-9820130172)
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