Short-term Nickel Price Likely to Remain High on Relatively Tight Supply and Slightly Improving Downstream Demand

SHANGHAI, Dec 28 (SMM) - On the supply side, the spot premiums of pure nickel were stubbornly high amid tight supply. The NPI circulating in the spot market was at a low level following robust transactions, and almost all Indonesian NPI has been booked. On the demand side, the prices of stainless steel remained low, and some traders restocked in a small amount. In the alloy market, some factories began to restock ahead of the Chinese New Year. To sum up, SHFE nickel price is likely to be supported by persistent tight supply of pure nickel and slightly improving downstream demand. 

Pure nickel: In the spot market, Jinchuan nickel was quoted with premiums of 10,000-10,500 yuan/mt as of October 27, with an average of 10,250 yuan/mt, flat from a day ago. NORNICKEL nickel was quoted with premiums of 7,300-7,500 yuan/mt, with an average of 7,400 yuan/mt, flat from a day ago. The spot premiums were high amid lingering supply shortage, though SHFE nickel kept rising yesterday. In terms of nickel briquette, the prices stood at 227,200-228,700 yuan/mt, up 5,350 yuan/mt from the previous trading day. The transactions were poor for its meagre cost efficiency.

NPI: As of December 27, SMM Ni 8-12% high-grade NPI was 1,355 yuan/mtu (ex-factory, tax included), flat from the previous trading day. The NPI circulating in the spot market was at a low level following robust transactions, and almost all Indonesian NPI has been booked. The NPI plants were generally firm to their prices. On the demand side, some large-sized steel mills made inquiries to prepare for monthly routine procurement, and the physical transactions can be expected before or after the New Year’s Day holiday.  Meanwhile, the market confidence has been slightly boosted after stainless steel price recorded several winning sessions, and the mills are expected to be slightly less firm on the purchasing prices. NPI prices are expected to maintain some momentum in the near term.

Stainless steel: As of December 27, the prices of spot stainless steel in Wuxi and Foshan both rose. On the demand side, the prices of stainless steel remained low, and some traders restocked in a small amount. The spot prices, on the other hand, rose slightly along with rising futures contract price, and the market transactions were moderate. The market players shall watch the restocking progress after the recent wave of pandemic outbreak. In terms of cost, the NPI price was flat yesterday. Some large-sized steel mills made inquiries for monthly routine procurement, and are passive towards high NPI prices amid pessimism over future stainless steel consumption. Considering that the NPI plants have been firm to their prices, the market has been in a stalemate. NPI prices are expected to mover rangebound. Ferrochrome prices were flat. Though some ferrochrome plants intended to hike the prices in light of high cost, the market transactions were muted approaching the month-end when market players stood on the sidelines. Ferrochrome prices are likely to remain stable in the near term.

On the whole, the spot prices of stainless steel will run steadily with occasional drops in the short term under the shadow of spreading covid. On Monday December 19, the 304 cold-rolled coil in Wuxi was reported at 16900-17100 yuan/mt against the national average of 16855 yuan/mt. 304 hot-rolled coil in Wuxi was quoted at 16400-16800 yuanmt against the national average of 16615 yuan/mt. The prices of 316L cold-rolled coil were 29,900-30,300 yuan/mt in Wuxi, with a national average of 30,040 yuan/mt. The prices of 316L cold-rolled coil were 9,750-9850 yuan/mt in Wuxi with a national average of 9800 yuan/mt. 430 cold-rolled coil in Wuxi was reported at 8000-8100 yuan/mt against the national average of 8050 yuan/mt. As of 10:30 am (Beijing time), the SHFE SS 2302 contract stood at 16635 yuan/mt, and the spot premiums in Wuxi were 435-635 yuan/mt. (Spot prices of deburred edge products = Spot prices of burr edge products + 170 yuan/mt)