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[SMM Analysis] Shanghai Nickel diving fell nearly 2% in the afternoon. Will the supply-side tight support logic be loosened?
Sep 16,2020 16:38CST
The content below was translated by Tencent automatically for reference.

SMM9 March 16: Shanghai Nickel opened down today, continuous diving fell nearly 2% in the afternoon, and then recovered. By the end of the day, the main contract of Shanghai Nickel 2011 was at 117540 yuan / ton, down 1.17%. In the spot market, most traders have shifted from the Shanghai Nickel 10 contract to the main monthly 11 contract quotation. The morning market inquiry is OK, but only the traders offering low prices have certain transactions. At present, spot fundamentals fluctuate less, downstream bargain-hunting on demand, and consumption is more stable than in the earlier period.

SMM believes that the fundamental focus of nickel prices is still biased towards the nickel ore-nickel iron-stainless steel industry line. The price of nickel ore has risen all the way under the condition of considerable shortage of supply. The high price of Ferro nickel has been supported by both raw material support and tight supply. The mentality of high production in stainless steel plants has not been significantly reduced for the time being. This production line still has a strong support for nickel price. However, the fluctuation of macro factors has obviously disturbed the price of nickel in the short term. Today, the price of nickel seems to have fallen sharply due to the influence of capital sentiment in the afternoon. However, the US dollar index fell rapidly after the close of trading in Shanghai, and Lunni immediately went back to intraday highs, followed the Fed's interest rate resolution in the evening, and is expected to maintain loose liquidity. Short-term Shanghai Nickel may continue to fluctuate at 117000-120000 yuan / ton and Lunni 15100-15400 US dollars / ton.

Institutional point of view:

Huatai Futures: the price of nickel has recently been dragged down and adjusted by the external environment, but the overall upward trend has not yet ended. At present, the supply and demand of nickel is still strong, the prices of nickel ore, high nickel iron and scrap stainless steel continue to rise, the supply of nickel ore in the middle line is tight, the positive feedback of stainless steel demand on nickel price may continue to strengthen, and the domestic demand for new energy vehicles is also gradually recovering. sales of new energy vehicles in Europe are growing rapidly, and nickel supply is in short supply in the third quarter. If the new production capacity of Xiangyu stainless steel in Indonesia is put into production as scheduled in the fourth quarter, or the domestic production of 300 series stainless steel remains at the current high level, the excess supply of nickel and iron in the fourth quarter will also be limited. In the middle line, as the new production capacity of Ferro nickel in Indonesia is put into production one after another, the supply of ferronickel in Indonesia will still become a significant surplus in the future. Nickel in Indonesia can still be further replaced by refined nickel in 304 stainless steel nickel raw materials, and the price of nickel in the middle line may still fall again.

Jinyuan Futures: previously, we believe that the rising trend of nickel prices has basically ended, and the follow-up trend will be dominated by high shocks, which is still maintained at present. The main support of this round of nickel price rise is driven by the downstream demand for stainless steel, but as the price of stainless steel falls, the market demand drops, stainless steel profits turn to a loss, and the demand for nickel begins to decline. In the later stage, with the gradual increase of Ferro nickel production capacity in Indonesia, the impact on domestic supply will be greater and greater, the overall supply will begin to exceed demand, and the upward pressure on nickel prices will become greater and greater. Although the market is gradually entering the pattern of supply exceeding demand, the trend of nickel price is still repeated before a large amount of inventory is accumulated and before the market demand weakens. In the future, the price of nickel is likely to fall after the high shock, but at present it is still mainly wait-and-see, waiting for the accumulation of inventory, until it forms a greater pressure on the price.

Jinrui futures: stainless steel prices peaked, profits are limited, restricting nickel prices to continue to rise. The supply of nickel ore is still tight, and nickel and iron prices are beginning to come under pressure: in the face of a substantial increase in nickel ore supply throughout the year, Philippine mine owners have maintained prices. October futures of some mines have been sold one after another this week, and the market will concentrate their bids next week. The FOB price of Ni mine (1.5%) is expected to increase by about 5-6 US dollars / wet ton. In terms of Ferro-nickel, the domestic high-nickel iron showed a price correction for the first time after it continued to rise in June. Domestic ferronickel production increased faster than expected in August, and the national nickel pig iron output is expected to decline slightly in September. In the case of stainless steel maintaining a high output in September, the overall supply of nickel raw materials is tight, and the price correction of nickel and iron is expected to be limited. At present, stainless steel profits are beginning to be compressed, in the later stage, we pay attention to the impact of profit compression on the actual output, as well as the negative feedback to the industry chain. Overall, the high production of stainless steel continues, and the shortage of raw materials has not been alleviated, the price of nickel may be mainly fluctuated.

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