New stainless steel capacity likely to extend rise in nickel prices in Q1

SHANGHAI, Jan 28 (SMM) – Higher downstream demand for stainless steel after CNY and new approvals of stainless steel capacity are likely to extend the increase in nickel prices in the first quarter. While current tight supplies of nickel pig iron (NPI) will ease as new capacity commissions, supply growth of NPI will be limited in the first quarter, SMM assessed based on production progress of projects.

A stainless steel mill in Shandong province recently received new quotas of stainless steel capacity by 2 million mt. Another large NPI plant in Shandong has been preparing for the construction of a new stainless steel project, which is expected to come online by mid-year. This boosted market expectations of downstream demand. 

Prices of nickel stemmed declines from the beginning of 2019, as the delayed commencement of NPI projects in Indonesia and China extended NPI supply tightness in the domestic market. 

Stainless steel prices also rebounded at the start of the year, and lifted profits at producers. This enabled producers to maintain stable production in January. This, coupled with falling inventories of refined nickel, also accounted for the higher prices of nickel in January. 

A shortage of NPI as raw material drove a stainless steel plant in the south to schedule a production cut around CNY.