Shanghai Futures Exchange announced "NIKKELVERK" refined nickel as a deliverable brand

SHANGHAI, May 26 (SMM)—Shanghai Futures Exchange announced on May 21 that the NIKKELVERK refined nickel (Ni content 99.8%) from Glencore was listed as a deliverable brand, which is called “Norwegian nickel plate”. In addition to the plate form, NIKKELVERK refined nickel is also bundled in barrels in cube form with side lengths at 25 mm, 50 mm and 100 mm.

Jinchuan refined nickel greatly impact by Norwegian nickel

The above specifications of Norwegian nickel were previously used as anode products in the electroplating industry, as they met the national standard of ASTM B39. However, the nickel content in Norwegian nickel is more than 99.98%, making it one of the nickel materials with the lowest total impurity content on the market. Domestic electroplating consumption is mainly concentrated in east China and south China due to the convenient access to imported sources in coastal areas. Domestic market of Jinchuan refined nickel has been greatly impacted by Norwegian nickel and Sumitomo nickel. As the overseas consumption was dragged down by the COVID-19 pandemic in 2020, some imported electroplated nickel plates flowed into the alloy casting industry with lower prices, but the amount was limited.

Prices of Norwegian nickel plate were between $400-500/mt in 2019, but dropped to $200/mt in 2020 and $120/mt in early 2021. The prices of some long-term orders were settled at $80-90/mt. Therefore, the import volume of Norwegian nickel increased rapidly since Q4 2020. According to data from China's customs, the imported refined nickel originating from Norway reached 5,169 in April 2021. The large amounts of arrivals and lower costs caused the decline in domestic prices of Norwegian nickel spots. The premiums of Norwegian nickel were above 3,000 yuan/mt in January and fell to around 1,000 yuan/mt in April. As of May 21, traders quoted Norwegian nickel at premiums of only 200-300 yuan/mt over SHFE 2106 contracts. In addition, overseas nickel consumption is recovering, and the prices of some small orders for Norwegian nickel have been raised to $180/mt, which may affect China’s import volume.

Impact of Norwegian nickel as a delivery brand in SHFE nickel

Although the Shanghai Futures Exchange issued the announcement on May 21, the domestic market has been expecting new delivery products for several months. There was news at the end of 2020 that the manufacturers had already reported relevant materials, and there was also news in mid-April that the brand was about to be delivered.

However, the new brand has little impact on SHFE futures contracts in the short term. The deliverables are the nickel plates, while a large amount of Norwegian nickel was imported in cube form in April. The current spot inventories of Norwegian nickel plate are over 2,200 mt in Shanghai. The imported nickel plates weigh lighter in China than in Norway due to the obvious change in latitude and longitude, which will affect the registered warehouse receipt. This problem also appeared in the imports of new Russian refined nickel, and the plants need to reach an agreement with traders. Therefore, warehouse receipts are unlikely to increase significantly in the short term. Only the forward contracts restored to the contango structure, and the near-month contracts were still in the back structure.