SHANGHAI, Apr. 16 (SMM) - In Shanghai, Jinchuan nickel prices were initially between RMB 111,500/mt on Monday, and Russian nickel prices were between RMB 110,500/mt. But as LME nickel prices continued to fall, Jinchuan nickel prices once dropped to RMB 109,700/mt, while Russian nickel prices also plummeted to RMB 108,700/mt. The market took a wait-and-see attitude, keeping transactions muted.
According to an SMM survey, 70% of market players believe nickel prices will fall below USD 15,400/mt. The sharp declines over the past two trading days hit market confidence significantly. They based their pessimistic opinion on severe oversupply and sluggishness in China's economy. SMM understands that the second phase of Jiangsu Yongjin Machine Manufacturing's 60,000 sqm, 250,000 mt/yr project is expected to enter operation in H2. Southwest Stainless Steel (Yunnan) will similarly bring 600,000 mt/yr of stainless steel production online this year. Guangxu Jinhai has another 300,000 mt/yr in cold rolled thin plate production scheduled to enter operation in June. Beihai Chengde plans to add 1 million mt/yr this year. Fuxin Specialty Steel will contribute another 750,000 mt/yr in added capacity, and Henan Jinhui a final 200,000 mt/yr. In total, the new capacity listed above amounts to 3.10 million mt for this year, a strong indication that no relief is in sight from the chronic oversupply problem in stainless steel. Besides, most of these projects use NPI as raw materials, with the utilization rate of refined nickel down sharply. The stainless steel market will not turn around, so demand for nickel will be low. Besides, China's GDP in Q1 only grew slowly. The release of new regulations to the property market and tightening fiscal policies increased market concerns.
The remaining 30% believe LME nickel prices will stop falling and hover between USD 15,400-15,600/mt. They think some bargain hunters will enter the market as nickel prices fell to their lowest since 2010. SMM sources report that nickel inventories at two important nickel importers have reached 7,000 mt. It was also reported some plant plans to buy hundreds of nickel. Although the rumors are of low reliability, some market players did believe nickel prices have bottomed out. In general, they believe nickel prices will not drop further this week.