[SMM Analysis] Nickel beans enter the ranks of SHFE deliverables! "demon nickel" is no longer a demon?

SMM5, 11th May:

The last issue issued an announcement on May 8 that Nickel beans will be available for delivery from the Shanghai Nickel 2011 contract. After the opening of the night market that night, the Shanghai Nickel 2010 contract and the Shanghai Nickel 2011 contract immediately converted to the Back structure, with a near-far price difference of about 300-400 yuan / ton, and the position of the Shanghai Nickel 2011 contract also increased by 510 hands that night. The near-far price difference is about 300-400 yuan / ton.

SMM has previously made a brief analysis of the possible impact of the news and the future. The link to the article can be found in https://hq.smm.cn/nickel/content/101108488.

So what is the background of nickel beans, which will soon be the subject of nickel delivery in Shanghai, and what characteristics are worthy of our attention? SMM organizes the following for you:

I. the difference between Nickel Bean and Nickel Plate

At present, the nickel plate and nickel beans in the market are called pure nickel because their nickel content is more than 99.6%. Nickel plate is usually a plate-like pure metal nickel which is refined by electrolysis after reducing nickel ore to high matte or nickel-cobalt compounds. On the other hand, nickel beans are obtained by high pressure intrusion of nickel ore by hydrometallurgy, first made into nickel powder, then made into pellets through binder, and then sintered. Because of the difference in technology, the nickel plate quality is more stable, easy to store; and in the nickel beans in the long storage process, the first to be oxidized is the adhesive, nickel beans will be slowly pulverized, the original full particles, will become a variety of strange shapes, the quality will also change in microseconds.

When the nickel plate is for delivery, it is usually bundled in the shape of a steel strip "well". Nickel beans, on the other hand, are usually packed in bags or buckets. According to the situation in the LME warehouse, we note that the packaging bags of nickel beans are vulnerable to damage in the process of loading, unloading and transportation. Some bags are so damaged that many have been replaced with bags that are not packaged in the original factory. Once the nickel beans are out of the LME warehouse, the confirmation of the weight and the original brand will be a big problem.

Second, the proportion of nickel beans in the global first-class nickel production and the proportion of nickel stocks.

From 2011 to 2020, the proportion of nickel beans and nickel powder in the global first-class nickel supply has gradually increased, and it is estimated that the output of nickel beans and nickel powder will account for about 24.34% in 2020.

The main countries and manufacturers of nickel beans are: BHP of Australia and Minara of Glencore, Ambatovy of Sumitomo in Madagascar, Norilisk Finland, Impala of South Africa, etc., as follows:

According to the nickel inventory data released by LME, the proportion of overseas nickel bean stocks has far exceeded that of nickel plates. As of May 5, 2020, nickel plates accounted for only 20, 000 tons, accounting for 8.75% of the total inventory, while nickel beans accounted for about 200000 tons, accounting for 89%.

III. Imports and exports, tariffs and premiums

On January 1, 2018, China raised the import tariff on other non-alloy nickel (tariff No. 75021090) from 1 per cent to 2 per cent, but Australia and Madagascar still enjoy a zero tariff policy (under the China-Australia Free Trade Agreement and tariff preferences for African least developed countries).

From the data provided by the General Administration of Customs, we can see that the main entrants to the country are the nickel beans from BHP Billiton (BHP) and Glencore (Glencore) in Australia, while the nickel beans from (Ambatovy) in Madagascar are relatively small in China because they are held by Sumitomo Merchants of Japan and South Korean resources.

In addition, whether the nickel bean is the original factory has a great impact on the import price, so the foreign merchant carries on the premium quotation to the nickel bean to the original factory or the non-original factory respectively. Generally speaking, the premium of American gold goods of original nickel beans is 50-100 US dollars / ton higher than that of non-original nickel beans, but compared with the 2% tariff, the profit of original imports is still much higher than that of non-original beans.

By calculating the import profit and loss of non-original nickel beans, we can find that due to the upside-down price difference between inside and outside, the import opportunities of non-original nickel beans are very few. And many nickel beans in LME warehouse are seriously pulverized because they are old for a long time. Therefore, no matter from the quality of production raw materials or economic point of view, non-original nickel beans are more difficult to enter the country. The main source of supply of domestic nickel beans is still nickel beans imported from the original factory.

IV. Circulation of Nickel beans in China

First of all, in the spot market, nickel beans due to poor liquidity, so the price for the nickel plate has been a certain discount price difference. In November 2019, when the last nickel contract in Shanghai appeared the risk of crowding out, the price difference between nickel plate and nickel beans was once opened to about 8000 yuan / ton because the nickel beans could not be delivered.

At the same time, the economy of nickel beans was favored by terminal manufacturers, and inventory began to decline steadily. However, in this process, nickel bean importers pay more and more attention to the liquidity risk of nickel bean, which to a certain extent affects the enthusiasm of traders and nickel bean manufacturers to sign a long association in 2020. The last issue listed nickel beans as deliverables, and SMM believes that imports of nickel beans are expected to gradually recover.

In this announcement, it is also mentioned that "the specific registration or designated brand and promotion standards shall be separately stipulated and announced by the exchange." So what is the standard of delivery of nickel beans on Wuxi electronic disk before?

We can see from the Wuxi electronic disk settlement standards, the three brands are imported duty-free country manufacturers. And clearly specify the date of production and the time limit for the completion of warehouse receipt application and quality inspection. Although it is not clearly specified as the original factory import, but to a certain extent to avoid the LME warehouse storage time of the old beans become delivery products.

In addition, the discount water for nickel bean delivery in Wuxi plate is set to-1000 yuan / ton. If there is no certain amount of water between the nickel beans and the nickel plate. Or it will affect the delivery intention of futures traders, and it will also have a great impact on the spot pricing of nickel beans.

To sum up, SMM analysis believes that although the last issue has listed nickel beans as deliverables, but still need to pay attention to the subsequent exchange of nickel beans delivery brand and delivery requirements of the announcement.

Although the LME nickel bean inventory is high and tired, it is not the supply source of domestic nickel bean consumption, especially the non-original warehouse receipt nickel bean, it is difficult to become the domestic delivery product, so the nickel inventory in the two cities will not be widely circulated in the short term.

The import volume of domestic nickel beans will gradually increase in the future, and after increasing the financial attribute, the domestic nickel bean price and the premium of the original factory nickel beans and gold goods will have a certain upward space in the future.

Wuxi electronic disk and Shanghai nickel contract price gap will gradually narrow in the future, cross-market arbitrage may be difficult to make a difference. The abundance of deliverables will reduce the risk of congestion in the nickel market in the future.

For more detailed data and analysis of the nickel industry, please contact SMM Nickel Research Group to consult and subscribe to SMM's report on China Nickel Industry chain 2019-2022.

Contact: Liu Yuqiao 021-51666804, QQ 2881050930

Zhao Ming 021-51666780

Catalogue of China Nickel Industry chain report 2019-2022

Annual report Summary: global balance of Nickel supply and demand, 2011-2022

1. Aspects of Nickel consumption

1.1 Analysis of stainless Steel Industry in China and India

1.1.1 Chinese Market Analysis of stainless Steel

1.2.2 Indonesian Market Analysis of stainless Steel

1.2 Battery Industry

1.2.1 New Energy Battery Industry

1.2.2 Analysis of Nickel consumption of traditional E Battery from 2014 to 2022

2. Overview of nickel supply

2.1 Market Analysis of Primary Nickel

2.1.1 balance sheet and Price Forecast of Global first-Class Nickel supply and demand in 2011-2022

2.1.2 Analysis of global first-class nickel production in 2011-2022

2.1.3 Analysis of first Class Nickel production in China from 2013 to 2022

2.1.4 quantitative Analysis of China's Import of Primary Nickel from 2009 to 2019

2.1.5 Analysis of global first-tier nickel inventory from 2014 to 2019

2.2 Analysis of Secondary Nickel Market

2.2.1 balance between supply and demand and Price Forecast of E Nickel Pig Iron from 2012 to 2022

2.2.2 Global capacity of nickel pig iron in 2011-2022

2.2.3 Global profit Analysis of Nickel Pig Iron from 2016 to 2019

2.2.4 Analysis of Global Nickel Pig Iron stocks from 2014 to 2019

2.2.5 Analysis of Global Water extraction Nickel (feni) production capacity from 2011 to 2022

2.3 Nickel Sulfate

2.3.1 Analysis of Nickel Sulfate Industry in China and the World

2.3.2 Global Nickel Sulfate production from 2016 to 2022

2.3.3 balance Table and Price Forecast of Nickel Sulfate supply and demand in China from 2014 to 2022

2.3.4 comparison of production cost of Nickel Sulfate with different mainstream Raw Materials

2.3.5 Global Nickel Intermediate production capacity 2017-2022

2.3.6 comparison of Global Intermediate Investment costs

2.4 Nickel ore

2.4.1 supply and demand balance and Price Forecast of Chinese laterite Nickel Mine from 2013 to 2021

2.4.2 quantitative analysis of nickel laterite imported from China from 2013 to 2021

2.4.3 inventory Analysis of laterite Nickel Mine in Chinese Port from 2014 to 2019

3. Appendix

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