The Sentiment to Stand Firm on Quotes Spreads Among Nickel Salt Smelters, Nickel Salt Prices Expected to Continue Rising in the Short Term [SMM Nickel Morning Meeting Summary]

3.19Nickel Morning Meeting Summary

Refined Nickel:

SMM March 18 News:Spot Premiums/Discounts: The mainstream spot premium quotation range for Jinchuan Nickel was 1,500-1,700 yuan/mt, with an average premium of 1,600 yuan/mt, up 200 yuan/mt from the previous trading day. The premium/discount quotation range for Russian Nickel was -200 to 0 yuan/mt, with an average discount of -100 yuan/mt, unchanged from the previous trading day.

Futures Market: Today, nickel prices showed a fluctuating trend after opening. As of 11:30, the closing price was 130,743 yuan/mt, down 2.31% from the previous trading day's settlement price, with a low of 129,810 yuan/mt.

Spot Premiums/Discounts: Jinchuan Nickel's premium increased by 200 yuan compared to the previous trading day. Last night, the futures market declined slightly, prompting traders to raise prices moderately to break even.

From a technical perspective, SHFE nickel futures contracts declined after opening, possibly indicating that the sentiment impact from previous Indonesian policies has subsided. Moving forward, close attention should be paid to the recovery of downstream demand.

Price Spread With Nickel Sulphate: Today, SMM 1# refined nickel prices were in the range of 129,700-132,050 yuan/mt, with an average price of 130,875 yuan/mt, down 2,675 yuan/mt from the previous day's spot price. The price spread was around 102,775, with nickel sulphate still at a discount to refined nickel.

Nickel Sulphate:

On March 18, the SMM battery-grade nickel sulphate index price was 27,867 yuan/mt, with a quotation range of 27,800-28,400 yuan/mt, and the average price increased WoW.Cost Side: This week, some traders raised the pricing coefficient for cobalt in MHP by about 5 points. The MHP coefficient remains at a high level, and there appears to be insufficient downward momentum for raw material coefficients throughout Q2. Yesterday, LME nickel prices declined slightly, weakening cost support for nickel salt smelters. However, sentiment to stand firm on quotes persists among smelters, and this has not yet been transmitted to the nickel salt market. Demand Side: Affected by fluctuations in the cobalt market, precursor plants slowed their procurement pace, though some still have just-in-time stocking demand. Supply Side: Raw material prices fluctuated at high levels, and sentiment to stand firm on quotes spread among nickel salt smelters. Nickel salt smelters maintained low inventory levels, and market circulation of nickel salt tightened. Comprehensive Analysis: Considering the persistent demand, low inventory levels, and sentiment to stand firm on quotes among nickel salt smelters, nickel salt prices are expected to have further upward potential in the short term.

NPI:

March 18 News: The SMM 8-12% high-grade NPI average price was 1,014.5 yuan/mtu (ex-factory, tax included), up 3 yuan/mtu from the previous working day. Supply Side: Domestically, as the rainy season in the Philippines nears its end, it will take time for nickel ore shipments to increase. Nickel ore prices remained stable, and smelters' production drivers were weak, with production running at low levels. In Indonesia, recent heavy rainfall and tight nickel ore supply led to low nickel ore inventory levels at smelters. Despite the release of new capacity, production only saw slight growth. Demand Side: Stainless steel futures orders were relatively strong, and with stainless steel scrap prices rising alongside finished product prices, the economic advantage of stainless steel scrap weakened. Stainless steel mills showed improved sentiment for high-grade NPI procurement, and market inquiries were active. In the short term, high-grade NPI prices are expected to remain relatively stable with a strong trend, supported by tight supply and demand.

 Stainless Steel:

According to the SMM survey, on March 18, stainless steel market prices showed mixed performance depending on market and inventory conditions. Products with tight resources continued to rise due to previous upward trends not being fully realized, while products with abundant resources faced downward pressure due to destocking. The most-traded SS2505 futures contract fluctuated downward, and as delivery warehouse transfers progressed, prices declined. At 10:30 a.m., SS2505 was quoted at 13,545 yuan/mt, down 95 yuan/mt. In Wuxi, the 304/2B spot premiums/discounts ranged from -25 to 215 yuan/mt.

The average price of 201/2B coils in Wuxi was 7,820 yuan/mt, down 15 yuan/mt, while in Foshan, it was 7,830 yuan/mt, down 5 yuan/mt. The average price of 304/2B coils with mill edges in Wuxi was 13,470 yuan/mt, up 20 yuan/mt, while in Foshan, it was 13,350 yuan/mt, unchanged. The average prices of 316L/2B coils in Wuxi and Foshan were 24,125 yuan/mt and 24,175 yuan/mt, respectively, both unchanged. The average price of 430/2B coils in Wuxi was 7,440 yuan/mt, up 30 yuan/mt, while in Foshan, it was 7,330 yuan/mt, down 10 yuan/mt. Overall, stainless steel prices showed mixed performance across different series and specifications.

The stainless steel market still faces supply-side pressure. Previous stainless steel capacity was at a high level, and additional capacity is expected in the future. Demand Side: Although the traditional peak season has arrived, downstream demand remains primarily just-in-time procurement, with overall demand release falling short of expectations. Market transactions showed mediocre performance.

The upward trend in the stainless steel spot market has weakened, and the market may shift to a horizontal fluctuation in the future. 

Nickel Ore:

Last week, in the Philippine low-grade laterite nickel ore market, prices remained stable overall, with weak demand from domestic plants. Under losses, acceptance of price increases was limited. For low-grade nickel ore, there were few transactions this week, and prices remained stable overall. For medium- and high-grade nickel ore, influenced by rising Indonesian ore prices, Philippine mines maintained sentiment to stand firm on quotes, and offer prices increased. Supply Side: The rainy season in southern major mining areas is nearing its end, but its impact persists. Looking ahead, Philippine shipments are expected to increase. Demand Side: The continuous rise in NPI prices boosted nickel ore prices, and smelters' medium- and high-grade nickel ore inventories remained low, with strong restocking demand. Ocean Freight Rates: Some ocean freight rates were reported at $11/mt. As the rainy season in southern major mining areas ends, shifts in shipment locations may lead to higher ocean freight rates. In summary, with strong supply and demand, SMM expects Philippine prices to fluctuate upward.

Current Market Transaction Prices: For pyrometallurgical ore, the mainstream premium price for Indonesian nickel ore in March on Sulawesi Island was $19-21/wmt. The SMM Indonesian domestic laterite nickel ore 1.2% (delivery-to-factory price) ranged from $25.5 to $27.5/wmt, while the 1.6% grade ranged from $46.5 to $51.5/wmt. In the first half of March, the 1.2% grade nickel ore HPM was $15.49/wmt, and the 1.6% grade was $27.01/wmt. The HPM for the second half of March will be announced around March 15. Supply and Demand: Compared to last week, there were no significant changes in the supply-demand structure. Supply Side: As the rainy season gradually ends, supply is expected to improve. Demand Side: Smelters continued just-in-time procurement, and shipment activity warmed up during the week. Inventory: Downstream smelters maintained low inventory levels, and procurement demand persisted. While supply loosened slightly, market concerns about nickel ore supply due to policy uncertainties remained. With downstream smelters maintaining steady demand and low inventory levels, SMM expects that despite the anticipated increase in supply, strong supply and demand will continue to support prices. Policy Side: Following changes to the HPM pricing formula and foreign exchange control policies, discussions are underway regarding an increase in nickel ore royalties. The market holds strong expectations for this policy to be implemented within the year. If implemented, it will directly lead to significant cost increases for mines. With strong bargaining power among sellers in the nickel ore market, the costs caused by royalties are likely to be largely passed on to downstream buyers, driving up nickel ore prices.