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[SMM analysis] Why did mining prices rise against the market when nickel prices tumbled?
Jul 26,2019 16:25CST
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Source:SMM
The content below was translated by Tencent automatically for reference.

SMM, July 26 / PRNewswire-Asianet /-

Nickel prices this week gave back the previous increase, but the CIF transaction prices of medium and high nickel mines have risen continuously. The CIF offer for Ni1.8% medium nickel mine rose to $54-55 / wet tonne this week, with an actual transaction price of $52-53 / wet tonne, up about $2 / wet tonne from last week's mainstream transaction price in East China.

CIF price of domestic import mainstream laterite nickel mine

Sea freight of nickel laterite mine

Nickel mine CIF prices rose sharply, on the one hand, due to a continuous increase in sea freight; on the other hand, although nickel prices fell this week, but the price center of gravity is still much higher than the previous operating range, so nickel mine FOB prices lagged behind.

Since the beginning of July, sea freight has been raised continuously, and as of July 26, the sea freight from pomalaa to Lianyungang was about US $12.5 to US $13 / wet ton, up about US $2.50 / wet ton from the beginning of last week. It is understood that the Panamanian shipping index rose 31 points, or 1.4 percent, to 2201, the highest since December 2010, indicating that shipping demand has been better in the near future, and the nickel mine shipping market has also clearly felt the shipping tension.

From the point of view of its own supply and demand, the supply of nickel ore has maintained a month-on-month increase, but the increase has not been as expected, and demand has increased significantly in the near future. The price of ferronickel rose sharply with the price of nickel. Nickel pig iron plants are generally bullish on the price of nickel ore in the later period, and the current price is still at a low level, so recently many factories have increased their purchasing volume and prolonged the inventory cycle of raw materials.

SMM takes the quarterly nickel ore import as the supply, investigates the actual purchase quantity of each nickel pig iron factory as the demand, and takes into account the supply and demand balance made after the inventory cycle of the factory to reflect the current supply and demand pattern. As shown in the figure below, factories increased their purchases in the third quarter, and medium and high nickel mines turned into shortages. SMM believes that the ratio of nickel prices to electrolytic nickel prices will rise in the third quarter (that is, if nickel prices rise, nickel prices will rise more than nickel prices; if nickel prices fall, nickel prices will fall less than nickel prices).

Supply and demand balance of nickel mines in China

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Nickel mine
balance of supply and demand
sea freight

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