Nickel prices soared amid positive macroeconomic environment

SHANGHAI, Apr 28 (SMM)—The most-traded SHFE 2106 nickel contract soared 3.61% to close at 126,560 yuan/mt on Tuesday April 27, with open interest adding 11,867 lots to 157,132 lots. Open interest of the July and August contracts also added by 7,857 lots and 4,419 lots respectively.

Positive macroeconomic environment mainly contributed to the rise in nickel prices. 

As US Federal Reserve officials continued to downplay the impact of rising inflation and emphasized easing monetary policies, US 10-year Treasury yields have fallen again. Economic data from European and American countries have continued to improve since the beginning of April, and the US dollar index, which tracks the greenback against a basket of leading currencies, trended lower, which also boosted nickel prices. 

In 2020, due to the negative import price ratio, the domestic demand was met by a large amount of Russian nickel imported in 2019. Therefore, traders’ long-term Russian nickel contracts could only piled up in the bonded zone, and they suffered great losses, which also affected contract signing in 2021. 

Customs data showed that China imported 1,689 mt, 1,039 mt and 1,114 mt of Russian nickel in January, February and March respectively, far lower than last year's monthly average.

In the next 1-2 months, maybe no Russian nickel plants will send cargoes to China due to the mine accident in Norilsk, Russia.

Except for concerns on Russian nickel supply, consumption of nickel briquette is rising. 

As for the new energy industry that has attracted much attention, we need to pay attention to the following two points. The first is whether the demand for precursors in the near future can drive plants to use nickel briquette to produce nickel sulphate. The second is the long-term production process of high-grade nickel matte and whether downstream users have the ability to process the raw material.

Proportion of pure nickel in nickel sulphate raw materials has increased significantly in March and is expected to further rise to 6,000-7,000 mt/month.

In addition, the construction time of the autoclave equipment for processing high-grade nickel matte raw materials for nickel sulphate production is scheduled to take ten months. According to the current downstream process, the pressure on the supply of raw materials may be postponed to the second quarter of next year, which is later than expected.

Then in the next year, we can still expect pure nickel inventories to decline at home and abroad.