Palpable Overseas Stainless Steel Production Cuts Sustain Nickel Prices at a High Level

SHANGHAI, Sep 7 (SMM) - On the supply side, spot premiums fell amid rising futures prices yesterday. Pure nickel import showed narrow profits at present, but the spot supply was relatively balanced as the demand has been weak. For NPI, the output in September is estimated to be flat with that in August. The situation of oversupply will ease with rising demand for NPI. Currently, the NPI plants have been more willing to make shipments, and NPI prices will rise slightly in the near term. On the demand side, due to the expected shutdown of overseas stainless steel mills as well as accidents, the supply of overseas stainless steel is likely to drop significantly in September, which boosted domestic market sentiment with extensive price hikes. In terms of alloys, according to the SMM research, affected by the high nickel prices, the production of nickel-based alloys in August contracted 4.59% month-on-month, and the consumption of pure nickel fell 4.29%. In summary, although the downstream demand for pure nickel is currently weak, the domestic stainless steel market is expected to be optimistic in September, and the demand for primary nickel may pick up. In the short term, nickel prices may maintain remain high. 

Pure nickel: In the spot market, Jinchuan nickel was quoted with premiums of 10,000-11,000 yuan/mt as of September 6, with an average of 10,500 yuan/mt, down 750 yuan/mt from a day ago. NORNICKEL nickel was quoted at premiums of 4000-4500 yuan/mt, with an average of 4250 yuan/mt, down 400 yuan/mt from a day ago. Spot premiums fell slightly amid rising futures prices, but the absolute prices were still high. The transactions of spots were muted coupled with rising commission charges of pure nickel futures contract a day ago. In terms of nickel briquette, the prices were 177,000-178,300 yuan/mt, an increase of 5,350 yuan/mt from a day ago. At present, the cost efficiency of producing nickel sulphate with dissolved nickel briquette has declined, and the transactions weakened as well.

NPI: As of September 6, SMM Ni 8-12% high-grade NPI was 1,257.5 yuan/mtu (ex-factory, tax included), flat from the previous trading day. The stainless steel market is expected to pick up with real estate, infrastructure and other terminals expected to boom in September. Some large steel mills have ramped up the production schedules in September compared with the previous month. Therefore, the rigid demand of steel mills has increased to some extent, and market inquiries have been quite active this week. On the supply side, steel mills' purchasing interest for NPI rose, which prompted NPI plants to hold the prices firm. NPI prices are likely to rebound in the short term. 

Stainless steel: As of September 6, the prices of spot stainless steel in Wuxi and Foshan extended the increase. The prices of 304 cold-rolled coil rose to the 16,000 yuan/mt level, while hot-rolled coil prices kept rising. 430 cold-rolled coil prices also increased above 8,000 yuan/mt. Some steel mill agencies frequently raised their prices, but market inquiries and transactions were still active. In terms of cost, the prices of high-grade NPI remained stable during the day, the market inquiries were active. NPI prices are likely to rise with the manufacturers being increasingly firm to the prices. Ferrochrome prices rose to some extent, but the manufacturers still suffered losses. Some ferrochrome manufacturers indicated stronger production cuts in September, intensifying the game between the supplier and buyer. Ferrochrome prices are likely to rise in the near term. The prices of 304 cold-rolled coils moved between 16200-16500 yuan/mt, and the prices of 304 hot-rolled coils were between 15700-16300 yuan/mt. 316L/2B was reported at 26,200-27,400 yuan/mt in morning trade, 201/ 2B at 9,300-9,600 yuan/mt, and 430/2B at 8,000-8,400 yuan/mt. As of 10:30 am (Beijing time), the SHFE SS 2210 contract stood at 16270 yuan/mt, and the spot premiums in Wuxi were 100-400 yuan/mt. (Spot prices of deburred edge products = Spot prices of burr edge products + 170 yuan/mt).