[SMM analysis] the proportion of primary nickel used in the production of nickel sulfate from nickel bean / nickel powder production in the precursor plant will be reduced to 0%?

SMM, June 28 / PRNewswire-Asianet /-

Since June 26, the new energy vehicle industry has formally implemented a new subsidy policy. On the other hand, most of the terminal demand was released early at the end of last year and the beginning of this year, and the market demand has weakened significantly since May and June. The decline in terminal demand has been transmitted to the upstream raw material market, and the nickel sulfate market is also unusually desolate.

Premium of battery grade nickel sulfate to grade I nickel (bean)

Due to its weak fundamentals, nickel sulfate prices have shown a unilateral downward trend since May. Even after mid-June, the price of electrolytic nickel has risen continuously, and the market of nickel sulfate has not improved significantly. At present, the battery-grade nickel sulfate premium to the first grade nickel (bean) has dropped to less than 10, 000 yuan per metal ton, compared with 7430 yuan per metal ton on Friday.

According to SMM research, when the premium of battery grade nickel sulfate to grade I nickel (bean) is more than 10, 000 yuan / metal ton, it can cover the processing fee of dissolving nickel bean / nickel powder to produce liquid nickel sulfate in the precursor factory and the capital cost of purchasing nickel bean / nickel powder (the trade of nickel bean / nickel powder is settled in cash). When the premium of battery grade nickel sulfate to first grade nickel (bean) is less than 10,000 yuan / metal ton, the production of nickel bean / nickel powder in precursor plant will lose money and prefer to purchase nickel sulfate crystal directly. it not only reduces the cost but also alleviates the capital pressure (the 30-day book period + 6-month bank acceptance, which is the mainstream of nickel sulfate trade).

However, it is worth noting that SMM believes that it is not simple to think that the proportion of nickel bean / nickel powder production in the precursor plant will immediately drop to 0%. Some precursor factories still have pre-purchased nickel bean stocks, which are bought at a low price, that is to say, if the previous low-cost raw materials are produced, the precursor plant production may still be profitable.

In addition, some precursor factories have orders for nickel beans signed once a year, and even if the current economy of nickel beans / nickel powder as a raw material is not good, nickel beans are still imported every month. According to SMM, these precursor factories may consider the following ways: 1. Sell its nickel bean stocks to the market and purchase nickel sulfate crystals; 2. Given the current weak demand in the nickel bean market, even selling to the market may not sell, then the precursor plant may have to use nickel beans / nickel powder loss production under the pressure of capital cost; 3. If the production loss is large, or even exceeds the cost of default by the precursor factory, then the factory will not be excluded from terminating the nickel bean / nickel powder procurement contract and paying a certain penalty for breach of contract.

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