SHFE Nickel Remained High, and Spot Transactions Improved Slightly, but the Overall Supply and Demand Remained Weak [SMM Morning Meeting]

SHANGHAI, Apr 27 (SMM) - Although macro negative factors still existed, SHFE nickel maintained a high as the shortage at the fundamental supply side still gave strong support to the nickel prices. In terms of supply, the domestic pure nickel supply remains tight as the customs clearance of pure nickel was still poor and the operation rate of domestic nickel has not been restored. So the spot premiums were high. In terms of NPI, the spot supply of NPI remained tight as the ferronickel import was not smooth. Nickel sulphate spot was tight and was difficult to restore in the short term due to the serious losses of some enterprises. So the profit needs to be restored urgently. On the demand side, after the decline of SHFE nickel, the spot transactions of Jinchuan nickel has improved, and there have been transactions in alloy and other downstream recently. In addition, the intensified domestic pandemic situation  may lead to further weak demand. According to the research, the downstream orders, affected by the pandemic, have shown a decreasing trend recently. In terms of stainless steel, the recent spot transactions were poor. To sum up, although the futures has been declined recently due to the negative macro environment, pandemic situation, and weak demand, it is expected that the SHFE nickel will remain high as the tight spot supply of pure nickel was serious than the weak demand.

Pure nickel : As the recent futures prices have deviated from the spot supply and demand pattern, SMM now suspended offering premium/discount quotations of 1# Jinchuan nickel, 1# imported nickel and nickel briquette. SMM prices of 1# refined nickel, 1# Jinchuan nickel, 1# imported nickel are available as usual. This notice complies with IOSCO standards. In the spot market, Jinchuan nickel were quoted at 225,000- 230,000 yuan/mt, with an average price of 227,500 yuan/mt, down -3,700 yuan/mt from a day ago. NORNICKEL nickel was offered at 221,200- 222,200 yuan/mt, and the average price was 221,700 yuan/mt, down 4,250 yuan/mt from a day ago. Nickel briquette was quotated at 221,200- 222,200 yuan/mt, with an average price of 221,700 yuan/mt, down 3,750 yuan/mt from a day ago. The decline was mainly due to the low futures prices. In addition, the premiums in Shanghai generally rose and the transactions were improved. In terms of nickel briquette, the transactions were few as the nickel salt enterprises had less procurement for nickel briquette. 

NPI: As of April 26, SMM average price of NPI was 1,620 yuan/mtu (ex-factory, tax included), down 5 yuan/mtu from a day ago. Disturbed by macro factors, the stainless steel and nickel prices fell, but the NPI prices were still relatively high, which was slightly fluctuated due to the limited acceptance of steel mills. The NPI prices were still high due to the high cost of NPI plants on the supply side. Besides, the prices were hard to decline due to the huge price difference between pure nickel and spot supply shortage. Stainless steel plants had poor acceptance of high priced raw materials. The downstream demand for stainless steel was weak, and the spot prices was low, so the acceptance price of raw materials declined, and the high prices of NPI declined. NPI prices are expected to remain volatile in the short term.

Stainless steel: The risk avoiding sentiment of market rising rapidly due to the rising interest rate by the US Federal Reserve and the shrinking balance sheet. Non-ferrous metals and ferrous metals futures declined significantly, the stainless steel also declined a lot. Today’s futures remained decline as the risk avoiding sentiment continued increasing. The stainless steel spot market was still relatively poor. As the work has just resumed and the logistics has returned to normal, a confirmed case was found in Wuxi market, making the market fall into the pandemic panic again. Although the downstream transactions were poor, enterprises still made slight procurement at low prices amid the relatively mature market. Because of the huge price difference between the warrant and the market after the sharp futures decline, the demand for warrants partially replaced some spot goods. In the later stage, we still need to pay attention to the impact of logistics and pandemic on the market. In Wuxi, spot prices of 304 cold-rolled coils moved between 20,000- 20,300 yuan/mt and the prices of 304 hot-rolled coils were between 19,700- 19,800 yuan/mt, but there were some traders traded 50-100 yuan/mt lower. The 316L/2B remained stable and was quoted at 31,100-31,300 yuan/mt in the morning. As of 10:30 a.m. (Beijing time), the SHFE SS2206 contract stood at 19285 yuan/mt, and the spot premiums in Wuxi were 885 - 1185 yuan/mt. (Spot prices of deburred edge products = Spot prices of burr edge products + 170 yuan/mt).

[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]