Weak car consumption to weigh on battery-grade nickel sulphate prices after April

SHANGHAI, Apr 20 (SMM) – Prices of battery-grade nickel sulphate, a raw material for electric vehicle batteries, continued their rally that started in late-March, on the back of improved orders and transactions from a month ago. 

While prices of the material will continue to see some upsides potential in April, the pessimistic outlook for downstream demand at home and abroad under the cloud of the coronavirus will depress upward momentum of battery-grade nickel sulphate prices in the month ahead.

Average prices of battery-grade nickel sulphate in China (unit: yuan/mt, source: SMM)

Most nickel sulphate plants said their production lines would be fully engaged for April and their inventories began to run low. These drove the producers to hold back cargoes from the market. 

Nickel sulphate producers barely hiked production in April and mostly maintained the level of production from March due to the coronavirus crisis. In addition, suspension of two nickel sulphate plants in north China this month is expected to reduce output of battery-grade materials by 4,500-6,000 mt. 

Meanwhile, downstream producers of ternary precursors ramped up production in April, which led to higher demand for nickel sulphate and lower inventories of the material. 

Backlogged orders received from overseas in March supported operations of most Chinese ternary precursor plants in April. This suggested a delay in the influence of foreign demand on ternary precursor production in China. 

SMM expects domestic precursor mills to see a decline in overseas orders in the second half of May, as an escalated outbreak of the COVID-19 outside China hit demand in the car market in March and April. 

In the Chinese market, overall demand for battery-grade nickel sulphate in H2 will unlikely to surpass that of the same period last year, given the evolving impact of the pandemic and a mild stimulus from the two-year extension of the subsidy policy for new energy vehicles (NEVs). 

SMM assessed prices of battery-grade nickel sulphate at 23,500-24,000 yuan/mt as of April 20, flat from last Friday and up 1,250 yuan/mt from more than a three-year low of 22,500 yuan/mt in late March.