Cost Side: Tightening Nickel Ore Supply Strengthens Cost Support
This week, nickel ore supply continued to be a focal point in the market. In addition to the mining quota laws of two countries, nickel mines in Sulawesi, Indonesia, are in the rainy season, with miners showing strong reluctance to sell. The average price of domestic laterite nickel ore 1.2% grade rose to $23.5. Meanwhile, nickel ore production areas in the Philippines are also in the rainy season, with the CIF price of 1.4% grade nickel ore remaining firm at an average of $45.75 per mt. These factors have boosted market sentiment, leading to an overall increase in costs across the nickel industry chain, providing strong bottom support for nickel prices.
Demand Side: Weak Stainless Steel Demand, Limited Recovery in New Energy Sector
On the demand side, the stainless steel market remained sluggish. After the Chinese New Year holiday, the stainless steel market has yet to fully recover, with poor sales performance and subdued raw material procurement sentiment from steel mills. Meanwhile, demand in the new energy sector has shown no significant improvement. Although the market holds certain expectations for 2025 NEV demand, the rising market share of LFP batteries and the seasonal off-season in end-use consumption have limited the growth of nickel demand in the ternary battery sector. New energy demand is expected to improve in Q2 to Q3 this year.
Supply Side: Surplus in Refined Nickel Persists
Despite tight nickel ore supply, the refined nickel market continues to face surplus pressure. China's refined nickel production in February is expected to reach 35,000 mt, up 4.1% MoM and up 43.1% YoY, with new projects gradually coming online. Additionally, domestic and international inventory levels remain high. As of February 14, social inventory of refined nickel in six domestic regions reached 49,459 mt, up 10.67% MoM and up 105.17% YoY. This surplus situation has limited the upside room for nickel prices.
Future Outlook & Market Trend: Sideways Movement, Macro Sentiment Drives Volatility, Focus on Policy and Demand Changes
Overall, nickel prices exhibited a sideways movement this week. From February 10 to 17, SHFE nickel prices fluctuated between 124,100 yuan/mt and 129,150 yuan/mt. Market trading was active, but macro sentiment and policy uncertainties significantly influenced nickel price volatility. For instance, Fed Chairman Powell's cautious stance on interest rate cuts has put pressure on base metals. In the short term, nickel prices are expected to maintain a sideways movement. The market should closely monitor further developments in nickel ore policies in Indonesia and the Philippines, as well as the actual recovery of demand in the stainless steel and new energy sectors.
