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[SMM analysis] Shanghai nickel rose more than 4 per cent in the night market for more than 4 per cent for eight days.
Jul 18,2019 22:53CST
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Source:SMM
The content below was translated by Tencent automatically for reference.

SMM7 18: July 18 night trading, Shanghai nickel continued to hit a new high, as of 22:30 in the evening, Shanghai nickel 118400 yuan / ton, up more than 4%. The rest of the metals rose and fell in late trading, with lead up nearly 0.5%, Shanghai aluminum up nearly 0.3%, Shanghai copper up nearly 0.2%, Shanghai zinc down nearly 0.1% and Shanghai tin down nearly 0.4% as of around 22:35 in the evening.

From the basic point of view, the conditions change little: stainless steel plant production reduction is not expected to provide support for the overall demand for raw nickel, ferronickel because of its own economic advantages of steel mills favor has not yet surplus but in a tight balance; in terms of news, the recent frequent disasters in Indonesia and the strictness of mining policies in Indonesia and the Philippines provide a certain hype theme.

On the supply side, the growth is mainly in nickel pig iron rather than electrolytic nickel itself. According to SMM statistics, the national nickel pig iron increased by 3.44 per cent to 49500 nickel tons in June, an increase of 51.93 per cent over the same period last year. With the continued release of production capacity, it is expected that the production of ferronickel will maintain a rapid growth trend in the later period, and bring some pressure to the price of nickel at the same time. SMM believes that in June and July, nickel pig iron has just been in a transitional period from shortage to surplus, even if there is a surplus, the amount is small, so in the case of demand-side boost and supply-side reduction, the current nickel iron market is still in a tight state.

Downstream consumption, according to SMM research, in June, the national stainless steel production of 2.3449 million tons, down 2.34% from the previous month, an increase of 23.73% over the same period last year. SMM surveyed the initial production of 2.5045 million tons in July, and the total volume is expected to increase slightly in July.

However, the reason why nickel prices have been able to continue to rise recently, from the point of view of the dominant momentum of the rise, is still closely related to the dominance of funds in the context of low inventory levels and a small supply of deliverables, and bulls still occupy a strong position. Recently, large stainless steel plants have also boosted the nickel market in bidding and spot procurement, and the guiding price of stainless steel plants has also increased actively with the rise in nickel prices. Under the guidance of the long layout of the entire industrial chain, it is expected that the market will still be supported in the short term, but it is also necessary to pay attention to the follow-up trend of funds and the opportunity of profit-taking at any time. According to LME data, LME nickel stocks continued to decline, at 148200 tons as of July 18, nearly halving from last May.

In addition, stainless steel factories and agents are also following the madness of the nickel market and continue to raise the price of stainless steel shipment. As of July 18, the average price of 304/No.1 volume (Wuxi) is 14300 yuan / ton, 304 / 2B volume-trimming (Wuxi) average price is 15000 yuan / ton, 304 / 2B volume-rough edge (Wuxi) average price is 14700 yuan / ton. Operators said that the transaction situation is general, the demand is basically stable, some traders frequently inquire, but the transaction is limited for the time being. It is expected that the trading center of 300 series stainless steel will still have room for improvement in the short term. "Click to view spot price of stainless steel today

In terms of stainless steel profit level, according to the calculation of SMM, the gross profit rate of 304stainless steel cold rolled coil is about 2%. The sales price used in the calculation is the latest market transaction price, while the raw material price is the inventory price, which has a certain lag compared with the latest raw material market. Therefore, in the later period, the price of stainless steel needs to rise further in order to maintain the profit margin level.

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