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[SMM Analysis] the sharp rise in nickel prices has led to the recovery of the nickel sulfate market. Is the factory profit repaired?
Jul 19,2019 09:33CST
translation
Source:SMM
After nickel prices continued to break through the upper platform this week, the nickel sulfate plant could not accept the continued expansion of losses, actively raising the offer to 24000 to 25000 yuan / ton, and the actual transaction was 24000 to 24500 yuan / ton, up about 1500 yuan / ton from the mainstream last week.
The content below was translated by Tencent automatically for reference.

SMM, July 19 / PRNewswire-Asianet /-

The nickel price rose violently in July, and the production cost of the nickel sulfate plant rose sharply (due to the fact that the raw material wet intermediate product / waste was priced at the LME price * coefficient, and the raw material nickel bean / nickel powder quoted the futures price). However, the sales side was dragged down by a substantial reduction in production at the downstream precursor plant, the market demand was depressed, the price of nickel sulfate fell all the way, and the profits of the plant continued to narrow. According to the cost model of SMM nickel sulfate raw material price calculation on the same day, the plant has lost money in the production of nickel sulfate from MHP (nickel cobalt hydroxide) since mid-July.

Price trend of Battery Grade Nickel Sulfate

Profit trend chart of nickel sulfate production (in terms of raw materials of the day)

After nickel prices continued to break through the upper platform this week, the nickel sulfate plant could not accept the continued expansion of losses, actively raising the offer to 24000 to 25000 yuan / ton, and the actual transaction was 24000 to 24500 yuan / ton, up about 1500 yuan / ton from the mainstream last week.

The main reasons for the rise in transaction prices are as follows: 1. Despite weak downstream demand, nickel sulfate plants have also cut or converted production: national nickel sulfate production fell 10 per cent to 10300 metal tons in June from a month earlier, and is expected to fall by 17 per cent to 8500 metal tons in July, according to SMM research. two。 Downstream precursor factory raw material inventory cycle shortened, rigid demand stock this week: before the downstream stock is generally the end of the month at the beginning of the centralized procurement, but since May-June, due to pessimistic expectations for the future, the downstream shortened the inventory cycle, within the month batches of procurement. In other words, after the price of nickel sulfate rose this week, factories with lower stocks of raw materials, if not willing, can only accept the price increase.

Driven by capital, nickel prices have completely moved away from fundamentals, while nickel sulfate fundamentals are relatively weaker, and the increase is naturally not comparable to nickel prices. On July 18, nickel prices rose to the limit, and the loss widened again after a brief repair of profits at the nickel sulfate plant. For the future, SMM believes that supported by costs, nickel sulfate prices are still mainly rising nickel prices, but its own weak fundamentals is also an indisputable fact, nickel sulfate plants are expected to be difficult to maintain the desired profit level.

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Nickel sulfate
precursor
nickel bean
MHP
production

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