2023 Price Review: Global Pure Nickel Inventories Accumulate Nickel Prices Fall in 2023

[SMM Commentary: Global Pure Nickel Inventories Accumulate Nickel Prices Fall All the Way in 2023] The temporary recovery in demand in the fourth quarter of 2022 lasted until the beginning of 2023, but the weak demand throughout the year made nickel prices start a downward mode after the peak of the year in 2023...

In 2023, the global economic recovery will be slow, and the baseline forecast for global economic growth will fall from 3.5% in 2022 to 3.0% in 2023 and 2.9% in 2024, well below the historical (2000-2019) average of 3.8%. During the year, affected by the Federal Reserve's interest rate hike policy, the US dollar's international competitiveness continued to strengthen, coupled with the intensification of geopolitical conflicts that broke out in the third quarter, global safe-haven funds flowed to gold and the US dollar, resulting in weakened global liquidity and the price of commodities under pressure. Therefore, looking back on 2023, it is still a difficult year for the nickel market, the high price of nickel has fallen, the contradiction between raw material prices and terminal demand is particularly prominent in 2023, the intermediate processing links have entered a fierce mutual roll under the squeeze of high raw materials and low demand, the profits of the processing links have shrunk rapidly, and the processing links of the nickel industry have gradually entered the stage of clearing production capacity.

The brief recovery in demand in the fourth quarter of 2022 lasted until the beginning of 2023, but the weak demand throughout the year made nickel prices start a downward mode after the peak of 2023. From 208,000 yuan/ton at the beginning of the year to around 140,000 yuan in November, a decline of 33%. Interpreting 2023 from the perspective of supply, the word "change" still runs through the nickel industry. In 2021, the rapid development of new energy has led to the rapid expansion of the production capacity of nickel beans for nickel sulfate, the inventory of nickel delivery warehouses will continue to decrease, and the price of nickel will rise. Subsequently, the extreme market in March 2022 broke the state of nickel sulfate long-term premium pure nickel. By 2023, the pattern of nickel sulfate premium pure nickel that has lasted for nearly a year has prompted the nickel market to rapidly emerge a batch of production capacity for electrowinning nickel from nickel sulfate. The reversibility of the product has made the nickel market in 2023 take a completely opposite path to 2021. The rapid production and registered delivery of electrowinning nickel have greatly increased the inventory level of deliverables, and it is difficult to reproduce the extreme market. The surplus of pure nickel suppressed nickel prices, and nickel futures prices continued to refresh the low level of the year.

In addition to electrowinning nickel, Indonesia's rapidly expanding MHP and NPI high-ice nickel production also continue to supply energy to the nickel supply side, and the growth rate of primary nickel supply remains at a high level of 10%.

2023 is the year of the release of new electrowinning nickel production capacity, which has led to the expansion of the global pure nickel oversupply, and the global pure nickel inventory accumulation trend will be significantly higher in the third quarter of 2023 (SMM social inventory increased by about 74.72%). In addition, with the registration of Huayou brand nickel plate as a delivery product between the LME and the Shanghai Futures Exchange in the second quarter of this year, the global warehouse receipts increased significantly, and in the third quarter, GEM and CNGR applied for registration and listing on the LME after stable production and full production, accelerating the process of global pure nickel delivery expansion. From the demand side, after the MHP acid-soluble nickel salt production line matures this year, nearly 55% of the nickel salt raw materials are MHP, nickel c-gun accounts for about 28%, and nickel beans only account for 0.4% of the nickel salt raw materials, and it is expected to decline to 0.3% in 2024. On the demand side of stainless steel, the price of NPI is competitive, and the economy of using NPI to produce stainless steel is better than that of pure nickel and other raw materials. According to SMM statistics, NPI will account for 73.8% of stainless steel raw materials in 2023, while pure nickel will account for 1.9%. To sum up, the current traditional downstream demand for pure nickel continues to weaken, with the volume of military supplies and domestic aircraft will continue to drive the demand for alloys, thereby driving the consumption of pure nickel will maintain an increasing trend, and the rapid development of the alloy plate will become an important plate to support the growth of pure nickel demand in the future. According to SMM estimates, due to the impact of new and restored electrowinning nickel production lines at home and abroad, it is expected that the pure nickel output will reach 810,000 tons in 2023, and the pure nickel output is expected to reach 990,000 tons in 2027, taking into account the stable production of pure nickel production enterprises and excluding some uncontrollable factors. Under the expectation of the decline in global demand for pure nickel and the upward trend of pure nickel supply, the pattern of pure nickel surplus remains unchanged. In addition, it is worth noting that according to SMM data, the volume of pure nickel customs clearance is expected to drop to 72,000 tons in 2023, a decrease of 56.4% from last year. According to the data of the General Administration of Customs, the total domestic nickel plate exports during September 2023 were 3,756 tons, an increase of 173% month-on-month and 73.2% year-on-year. SMM expects that in the future, with the continuous increase in pure nickel production, domestic demand will not be able to consume all pure nickel production, and China may change from an importer of refined nickel to an exporter.

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