Home / Metal News / Nickel / What’s Outlook for Nickel Market after Cut News at Chinese NPI and Stainless Steel Producers? SMM Reports
What’s Outlook for Nickel Market after Cut News at Chinese NPI and Stainless Steel Producers? SMM Reports
May 2,2017 11:52CST
smm insightindustry news
Source:SMM
Recently, nickel market was falling for two main reasons. What's the outlook for nickel market after cut news at domestic NPI and stainless steel mills?

SHANGHAI, May 2 (SMM) – Recently, nickel market was falling for two main reasons. First, expectations over ore supply shortages have disappeared, lending no cost support to NPI. Last week, CIF prices for Ni 1.5% tumbled 16.5% to $35 per wmt, registering the biggest decline across the whole nickel industry chain. Nickel ore, however, was the only one reporting profits of the chain, despite being narrowed significantly. Second, stainless steel inventories are high, and continuous price declines added to losses at stainless steel producers. 

China Nickel Ore Inventories Keep Growing Slightly, SMM Reports, with Price Declines to Continue

Many domestic NPI and stainless steel mills have announced to cut output following continuous declines in the nickel market, SMM learns. 

High inventories of stainless steel and tight liquidity serve as two major factors which impedes nickel prices from rallying, SMM concludes. 

It is worth noting that production cuts at domestic NPI producers are expected to be bigger than those at stainless steel plants due to heavier losses, and the decline of supply will be larger than that of demand. 

One North China Stainless Steel Mill Cuts Procurement Price for High-grade NPI for May

Moreover, SMM survey finds that transactions during the round of price decline fell at a slower pace compared with previous declines, which meant that demand was not that bad. 

Hence, SMM expects nickel prices to bottom out, and to rally to $9,600-9,700 per tonne this week. 

Both High and Low-grade NPI Producers to Axe Production in May, with High-grade NPI Output to Fall by 15 percent at Least  
As of April 28, ex-works prices of high-grade NPI fell to 820 yuan per mtu (including tax), down 8 percent from the level seen in late March, incurring losses at domestic high-grade NPI producers. RKEF NPI producers, which employ advanced production technology, also headed into losses in April. By the end of April, losses at RKEF NPI producers in terms of cash costs were more than 5 percent and above, and those at EAF NPI producers also in terms of cash costs hit 10 percent and above, according to SMM data. 

As of April 28, ex-works prices of low-grade NPI dropped to 3,000-3,050 yuan per tonne (including tax), down about 5.5 percent from the level seen in late March, narrowing profits. 

SMM preliminary survey of major NPI producing regions in China finds that 6 high-grade NPI producers will make big production cut in May, and output at the 6 producers is expected at 56,500 tonnes in May, down 42 percent from April’s. The output loss will account for about 15 percent of China’s total output of high-grade NPI. This, together with potential losses having not been surveyed completely by SMM, will bring declines of high-grade NPI output up to above 15 percent in May. 

SMM survey also finds that 7 low-grade NPI producers will cut production in May, mainly low-grade NPI-stainless steel integrated producers. Output at the 7 producers is estimated at 265,000 tonnes in May, down 33 percent from April’s, and production cuts are expected to account for about 30 percent of China’s total low-grade NPI output. 

#200 and #300 Stainless Steel Cuts to Account for 12 percent, Mainly #200 Steel

Based on cut plans announced by mills (see table below), combined output cuts of #200 and #300 stainless steel, nickel-bearing stainless steel, are estimated to reach 235,000 tonnes, and rolling output cuts are expected at about 200,000 tonnes, accounting for 12 percent of China’s #200 and #300 total. 

If the cuts are carried out as planned, stainless steel inventories will fall rapidly in China, and this will support domestic stainless steel prices, and the support will be also felt by nickel market. Eyes should be on the development of cuts at domestic stainless steel mills.

For news cooperation, please contact us by email: sallyzhang@smm.cn or service.en@smm.cn.

nickel prices
nickel ore prices
NPI

For queries, please contact Frank LIU at liuxiaolei@smm.cn

For more information on how to access our research reports, please email service.en@smm.cn

Related news