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[institutional point of view] the price differentiation between upstream and downstream is serious. Nickel price is in the short-term adjustment stage.
Sep 21,2020 08:55CST
Source:Huatai futures
The content below was translated by Tencent automatically for reference.

SMM Network News:

Nickel varieties:

Nickel ore prices continued to rise sharply this week, up nearly 8% this week, and nickel mine prices have risen by as much as 24% since the beginning of the month, but the contradiction between the strength of the nickel ore end and the weakness of downstream stainless steel highlights, stainless steel inventory has obviously rebounded and prices have continued to decline. Stainless steel factories are not receptive to high-priced nickel-iron, and nickel-iron trading is in a downturn. Nickel mine port inventories continued to pick up slightly this week, but are still at an all-time low. With the rainy season approaching in the Philippines, there is not enough time to prepare for nickel ore consumption during the rainy season. After the Philippines enters the rainy season in the fourth quarter, the domestic nickel mine supply may be in short supply.

Nickel point of view: nickel is in the adjustment stage recently due to the weak consumption of stainless steel and the drag of the external environment, but the overall upward trend may not be over yet. Recently, due to the failure of consumption in September due to high production of stainless steel, inventory began to accumulate significantly, stainless steel profits continued to decline, if consumption has not improved, stainless steel production may not be able to maintain a high level, resulting in a gradual surplus of nickel and iron. However, it is still impossible to falsify October peak season consumption, stainless steel peak season consumption may be delayed but not necessarily absent, stainless steel positive feedback on nickel prices may be weaker in the short term, but it is still possible to continue to strengthen after October. Domestic demand for new energy vehicles is also gradually recovering, and sales of new energy vehicles in Europe are growing rapidly, and it is expected that there is still room for upside after the end of the nickel price adjustment. 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.

Nickel strategy: unilateral: nickel supply and demand is still strong, but short-term stainless steel consumption weakness and the external environment dragged into the adjustment stage, temporarily wait and see, there is still room for upward after the adjustment. The center line is empty.

Key points of nickel concern: Indonesian nickel mining policy, macro environment, epidemic situation and policy changes in the Philippines and Indonesia, Indonesian nickel iron production progress, supply changes of large traditional nickel enterprises.

Varieties of stainless steel:

Stainless steel view: because the output of 300 series stainless steel has been maintained at a high level in recent months, and the expectation of stainless steel consumption season after September failed, the consumption increment could not match the supply increment, which led to the gradual accumulation of inventory and weak price operation. However, recently, the price of nickel raw materials is still strong, the cost of stainless steel remains high, the willingness of steel mills to raise prices is strong, and the inventory downstream is low, so it is not possible to falsify consumption in the peak season in October. in the later stage, if demand improves, stainless steel prices may still bounce up again, but the upside space may be relatively limited. In the middle line, the supply pressure of Ferro nickel in Indonesia will all affect the price of stainless steel. with the gradual surplus of ferronickel supply, the price of stainless steel may follow the cost downward, and the price of the middle line will be short.

Stainless steel strategy: short-term stainless steel prices are in the adjustment stage, wait and see for the time being for consumption to pick up, but the lower cost support is still obvious. The center line is empty.

Key points of stainless steel concern: Indonesian nickel mining policy, downstream consumption, epidemic situation and policy changes in the Philippines and Indonesia, stainless steel inventory, stainless steel positions and deliverables, NPI in China and Indonesia and stainless steel production progress.

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