NPI Plants Keep Bearish at Nickel Price

"Interpreting Global Nickel and Indonesia Stainless Steel Industries: Supply-Demand Dynamics and Outlook"Stainless Steel Industries**

Indonesia produced 117,900 mt (Ni content) of NPI in March, up 3.51% MoM and 23.9% YoY. In Q1, output rose 19% YoY to 353,700 mt in nickel content. Caused by the limited RKAB approval, smelters are still purchasing nickel ore at a high premium. However, tight supply of nickel ore pushed raw material inventory to fall in March. Considering Lebaran in April, the output of high-grade NPI in April is expected to be 121,000 mt in nickel content, a slight increase of 2.66% MoM. If RKAB approval is still slower than expected, NPI output will be influenced in the future.

As of last Friday, the average price of 8-12% high-grade NPI was 954.8 yuan/mtu (ex-factory, including tax), down 3.2 yuan/mtu WoW. Supply side, even though the approved nickel ore quota is increasing, it still takes time for the nickel ore to move from the mine to the smelter. As a result, the current operating rate of NPI producers remains low. Stainless steel and stainless steel scrap prices kept dropping. High-grade NPI is still more cost efficient than stainless steel scrap. The terminal need for stainless steel stayed low, failing to boost the high-grade NPI prices. As a result, it causes a build-up in inventory and is expected to keep NPI prices low.

The Lisbon-based International Nickel Study Group (INSG) released data on Monday March 21, showing that in January 2022, the global nickel market was oversupplied by 6,000 mt, while there was a supply shortage of 5,300 mt in the same period last year.

According to sources, Indonesian President Jokowi admitted that the ban on raw ore export had not been without challenges, as the European Union (EU) has filed a lawsuit against Indonesia’s nickel ore export ban at the World Trade Organization (WTO).

Recently, the conflict between Russia and Ukraine has caused many worries in the financial market. With the further aggravation of the situation, both domestic and foreign nickel prices have risen sharply, among which SHFE nickel prices have once again been set a record high.

Shanghai nonferrous metals mostly closed in the positive territory as the market was cheered up by the macro front, as China released its December official manufacturing and non-manufacturing PMI readings, which topped market expectation.

CATARC Co. recently released the "2021 Energy-saving and New Energy Vehicle Development Report."

China imported 4.01 million mt of nickel ore and its concentrate in November, a decrease of 10% from the previous month and a year-on-year increase of 12%, According to General Administration of Customs.

Shanghai base metals basically trended lower amid a cautious market which expected the Fed to wrap up the bond purchasing program early than estimate. Meanwhile, their counterparts on LME mostly closed in the positive zone.