Discounts of High-Grade NPI over Refined Nickel Expanded, Likely to Stay Stable This Week

SHANGHAI, Oct 25 (SMM) - The SMM average price of 8-12% high-grade NPI stood at 1,502.5 yuan/mtu (ex-works, including tax) as of Friday October 22, up 57.5 yuan/mtu from a week earlier, and the average price of Indonesian NPI stood at 1,497.5 yuan/mtu (including tax, delivery to ports), 55 yuan/mtu higher than a week earlier.

The prices of auxiliary energy materials such as coal and semi-coke remained high and volatile, and the higher electricity prices in some regions raised the cost of NPI production, so the NPI plants were willing to keep the prices firm. The NPI production was still seriously affected by the dual control of energy consumption, while the stainless steel production was recovering. The tight NPI supply pushed up the prices. The stainless steel plants accepted the high NPI prices amid the high profits. The prices of high-grade NPI are expected to move between 1,490-1,520 yuan/mtu (ex-factory, including tax) this week and rise steadily in the short term.

The weekly average discount of high-grade NPI stood at 32.5 yuan/mtu against refined nickel, 19.5 yuan/mtu higher than a week earlier. The NPI prices rose significantly amid the tight supply and once stood at premiums over the refined nickel. However, the market has been expecting brisk demand from the stainless steel and new energy sectors, which drove up the nickel prices to over 16,000 yuan/mt, turning the premiums of high-grade NPI into discounts again. The nickel prices are expected to fluctuate at the high levels this week, and the high-grade NPI prices are expected to rise. The discounts of high-grade NPI over the refined nickel may stay flat.

The profits of the high-grade NPI based on the ore purchased 25 days earlier stood low last week, and the profits of the smelters turned into losses. The high stainless steel profits made the mills accept the high NPI prices at around 1,500 yuan/mtu (ex-factory, tax included) amid the higher costs and tight supply. Thus the NPI profits rose. However, the prices of energy-related auxiliary materials remain high, the electricity prices in Inner Mongolia, Guangxi and other regions increased, and the cost of NPI smelting squeezed the rising profits. The NPI plants suffered losses. The NPI profit is expected to remain low in the short term, and it is unlikely to rebound significantly. The costs rose significantly after the adjustment last Friday amid the latest electricity prices.