SHFE Closed the Day with Gains of 3.64%, Supply and Demand both Impacted by COVID and Price Volatility

SHANGHAI, Mar 30 (SMM) - SHFE nickel has been diving for three consecutive trading days recently. It traded sideways in early trading today, with a drop of more than 3.28% at one point. It suddenly increased sharply in the afternoon. As of the closing, the increase was 3.64%, and the contract stood at 230,050 yuan/mt.

Spot market: The average spot price of SMM1# refined nickel today was 219,400 yuan/mt, down 0.68% from March 29.

According to SMM research, Jinchuan was quotated at 218,800-220,000 yuan/mt, with an average price of 219,400 yuan/mt, down 1,500 yuan/mt from yesterday. NORNICKEL nickel was offered at 219,000-220,000 yuan/mt, and the average price was 1,400 yuan/mt lower than the previous day. The price decline was mainly due to the downward trend of SHFE nickel driven by LME nickel.

Nickel briquette was quotated at 216,800-218,000 yuan/mt, with an average price of 217,400 yuan/mt, down 500 yuan/mt from yesterday.

On the supply side, the downstream was cautious amid steep ups and downs of spot pure nickel. The sustaining import losses have led to the scarcity of nickel briquette. Sumitomo and NIKKELVERK nickel supply remained tight.

In terms of nickel pig iron, the prices fell slightly due to falling SHFE nickel yesterday. But as the current smelting cost is high, the upstream is willing to hold firm to the prices. At present, the acceptable prices of upstream and downstream are quite different, and the transactions in the spot market has been muted.

On the demand side, due to the impact of the pandemic, the steel trading market in Wuxi has been closed for closed-off management. The centralised procurement of stainless steel plants has not yet come, and the overall transaction was poor.

In terms of nickel sulphate, the cost efficiency of self-dissolved nickel briquette has not yet recovered, and the production of nickel sulphate showed signs of reducing. At present, some precursor plants still have procurement needs at the end of the month. However, in the context of the sharp fluctuations in nickel prices and the severe pandemic, the procurement cycle is forced to be postponed.

To sum up, the current pandemic and the recent sharp fluctuations in SHFE nickel have had a greater impact on the supply and demand in the spot market. SMM believes that currently, SHFE nickel is greatly affected by LME nickel, while LME nickel has not yet shaken off the impact from money game. In the short term, the moves of SHFE nickel may still be subject to LME nickel.