Spot market is coming to an end due to the rhythm of downstream stocking, and the trading sentiment of the nickel spot market has cooled down

On February 6, the main contract of Shanghai nickel opened at 124,860 yuan/ton and closed at 124,960 yuan/ton, up by 100 yuan/ton from the previous trading day's closing price. Intraday trading was weaker compared to the previous trading day, with an increase of 70,399 lots in trading volume and a decrease of 3,598 lots in open interest. This combination indicates a strong wait-and-see atmosphere for both long and short positions, with both sides reducing trading activity. The decrease in open interest coupled with the price increase indicates that the short positions in the futures market are surrendering and starting to actively cover shorts (i.e., buying to hedge), pushing prices higher. Although the short positions are actively covering, they are relatively rational and not urgent, seeking ideal prices. Therefore, prices are expected to rise slowly, and there is a high probability of sustained upward movement.

From a macro perspective, on the evening of February 1, the Federal Reserve announced that the interest rate range for February remains unchanged. Chairman Powell stated that the expectation of a rate cut still exists for this year, but there is no possibility of a rate cut in the short term. From a fundamental perspective, the spot market today is entering the final stage of downstream stocking rhythm, and the trading sentiment in the spot market is cooling down. In addition, some pure nickel has arrived, increasing the supply of pure nickel. Overall, it is expected that nickel prices will fluctuate weakly in the future.

Pure Nickel: On February 6, the premium for Jinchuan nickel was reported at 4,200-4,400 yuan/ton, with an average of 4,300 yuan/ton, up by 250 yuan/ton compared to the previous trading day. The premium for Russian nickel was reported at -100 to 0 yuan/ton, with an average of -50 yuan/ton, remaining unchanged from the previous trading day. Today, nickel prices fell sharply in the morning, and the spot premium showed a slight overall rebound. The main reason is that the Spring Festival is approaching, and some manufacturers and freight have already taken holidays, resulting in tight spot market supply. Today, nickel bean prices were reported at 120,500-120,800 yuan/ton, down by 650 yuan/ton from the previous trading day. The price difference between nickel beans and nickel sulfate is approximately -1,168 yuan/ton (nickel sulfate prices are 1,168 yuan/ton higher than nickel bean prices).

Nickel Pig Iron: On February 6, the average price of SMM 8-12% high nickel pig iron was 932.5 yuan/nickel point (including tax), unchanged from the previous working day. From a supply perspective, due to the impact of the Spring Festival holiday, some iron factories entered the shutdown phase in January, and it is expected that China's high nickel pig iron production will further decrease in February. In addition, according to SMM research, nickel iron inventory at the end of January decreased by 1.78% compared to the previous month. From the demand side, most steel mills have completed pre-holiday stocking, and some steel mills temporarily do not have pre-holiday stocking demand, which is expected to be replenished after the holiday. Similarly affected by the Spring Festival holiday, steel mill operating rates will decline in February. Overall, the supply and demand of nickel pig iron are still weak, and it is expected that the increase in steel mill production will be limited in the future, and the loose supply of nickel pig iron will be difficult to change, so the rebound space for nickel pig iron prices is limited.

Nickel Sulfate: On February 6, the SMM battery-grade nickel sulfate index price was 26,963 yuan/ton, up by 57 yuan/ton from the previous working day. The price of battery-grade nickel sulfate was 26,800-27,600 yuan/ton, up by a large margin of 200 yuan/ton from the previous working day, with an average increase of 100 yuan/ton. Today, the price of nickel sulfate rose slightly, mainly due to the fact that under the current market conditions with relatively low spot trading volume, salt factories have a strong price support mentality, and the trading price range is widening in a relatively quiet market. Approaching the Spring Festival, the current market inquiry and transaction activity is relatively low.

Stainless Steel: On February 6, according to SMM research, today's stainless steel futures market was weak and fluctuated, and spot prices were stable compared to yesterday. Stainless steel spot traders have entered the holiday, and only a small number of traders are still operating. There is basically no transaction in the spot market. On the raw material side, the prices of high-nickel pig iron, high-carbon ferrochromium, and scrap stainless steel have been running steadily recently, and the cost line of stainless steel remains stable. It is expected that the spot price of stainless steel will remain stable in the short term. On the same day, 304 cold-rolled in Wuxi was quoted at 13,900-14,200 yuan/ton, 304 hot-rolled in Wuxi was quoted at 13,450-13,550 yuan/ton, 316L cold-rolled in Wuxi was quoted at 24,000-24,800 yuan/ton, 201J1 cold-rolled in Wuxi was quoted at 9,000-9,100 yuan/ton, and 430 cold-rolled in Wuxi was quoted at 8,100-8,200 yuan/ton. The SHFE 10:30 SS2403 contract price was 13,645 yuan/ton, and the Wuxi stainless steel spot premium was 485-785 yuan/ton. (The spot beveled edge = raw edge + 170 yuan/ton).

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