[SMM Analysis] Nickel Sulphate Smelters Continue Significant Losses, Downstream Supply Chain Stability May Face Challenges  

I. Recent Price Review

As of December 16, SMM battery-grade nickel sulphate index price stood at 26,310 yuan/mt, and battery-grade nickel sulphate prices ranged from 25,980 to 26,840 yuan/mt, with the average price up approximately 90 yuan/mt compared to early December.

In terms of supply, at the beginning of the month, due to losses, some nickel sulphate producers chose to cut production or suspend operations, leading to a decline in nickel sulphate production schedules in December compared to November. Regarding shipments, nickel sulphate producers showed a significantly stronger sentiment to stand firm on quotes compared to November, with prices rising, and no nickel salt smelters in the market were willing to sell nickel sulphate at low prices.

On the demand side, precursor plants showed high enthusiasm for inquiries and transactions during the early December procurement period. By mid-December, top-tier precursor enterprises had mostly completed stockpiling, but some precursor plants still maintained only safety inventory levels, leaving room for certain procurement demand.

Overall, the intensified losses faced by nickel sulphate producers have strengthened their willingness to maintain prices, while the supply of nickel sulphate in the market has gradually tightened.

II. Future Outlook

In the short term, nickel sulphate production schedules are expected to decline, and with higher profits from producing electrodeposited nickel, the risk of nickel sulphate producers switching production or suspending operations may lead to a shortage of nickel sulphate for precursor plants dependent on external purchase.

From the supply side, nickel sulphate producers are facing severe losses, with costs for producing nickel sulphate from high-grade nickel matte, MHP, and non-primary materials all experiencing varying degrees of losses. Most market participants believe that this issue of losses needs urgent resolution in the short term. Early this week, nickel sulphate producers showed strengthened sentiment to stand firm on quotes. Additionally, some nickel salt smelters are expected to cut production, switch production, or suspend operations for maintenance in January, further reducing the supply of nickel salts in the market.

Meanwhile, December market data shows that the price spread between battery-grade nickel sulphate and SMM electrodeposited nickel remains. As of December 16, the average premium for battery-grade nickel sulphate was -6,225 yuan/mt (Ni contained), with the inversion between nickel sulphate and electrodeposited nickel worsening compared to early December. According to SMM forecast, the price spread between battery-grade nickel sulphate and electrodeposited nickel is expected to persist in the short term, and the channel for externally purchasing nickel sulphate for refined nickel production will remain open.

Furthermore, some nickel salt smelters plan to switch production to refined nickel or add new refined nickel production lines, which will further squeeze the nickel sulphate supply originally intended for power batteries. The supply of nickel salts for batteries in the market may shrink, potentially causing a shortage of nickel sulphate for precursor plants dependent on external purchase.