SHANGHAI, Mar 2 (SMM) - The most-traded SHFE nickel dropped again today owing to the bearish news front, reaching a new low of 187,200 yuan/mt since November 1, 2022. The prices crashed 3.14% as of the noon close. LME nickel added 0.72% yesterday.
News front: Last night, NORNICKEL, the largest nickel producer in Russia, sold nickel to China in RMB, which is negative for nickel prices in China.
Spots: The average spot price of SMM #1 refined nickel fell 2.43% or 4,850 yuan/mt from March 1.
Traders began to offer spot quotes against SHFE 2304 nickel. Spot premiums of Jinchuan nickel were 7,000-7,500 yuan/mt. The average premium was 7,250 yuan/mt, down 1,000 yuan/mt from the previous trading day. NORNICKEL nickel was quoted at premiums of 4,800-5,200 yuan/mt, with an average of 5,000 yuan/mt, down 350 yuan/mt from the previous trading day.
Supply: In January, the refined nickel output dipped 1.5% MoM but added 37.24% YoY. According to SMM research, mainstream refined nickel enterprises worked in shifts during the CNY holiday to ensure normal production. Therefore, the output did not drop sharply in January. In addition, some refined nickel enterprises increased the production to make sure that downstream rigid demand in 2023 will be fully satisfied. Coupled with high premiums of refined nickel against nickel sulphate, some new electrowinning nickel production lines based on nickel sulphate have been scheduled for production.
Chinese refined nickel output will be around 17,000 mt in February, up 3.05% on the month and 30.8% on the year. Only the partial capacity of new electrodeposited nickel production lines was released in January and the full capacity will be put into production in February.
The spot prices of pure nickel fell, while the suppliers did not reduce their shipments. NPI traders got high in-plant stocks, and some were eager to dump their goods.
Demand: On March 1, the low stainless steel futures prices aroused panic in the market, and the spot prices have been lowered several times. The cold-rolled coil transactions were poor, while the hot-rolled coil transactions were acceptable. Pure nickel trading picked up slightly on the fall in the prices yesterday.
To sum up, the pure nickel supply is still expected to be sufficient, but the demand will remain poor. Spot transactions yesterday were less than expected. The low nickel warrants will beef up the nickel prices. The market shall pay attention to the impact of news, macro and changes in supply and demand on nickel prices.
