There is a strong pattern of continuous oscillation in the fundamentals of Shanghai Nickel.

Although the production schedule of stainless steel plants has declined in the short term, there is still a demand for replenishment before the Spring Festival, the cost of nickel sulfate continues to rise, quotations are expected to follow, and global inventories continue to decline, there is still a reason for Shanghai Nickel to continue to rise.

Recently, the price of nickel in Shanghai has continued to rise, breaking through the 160000 yuan / ton mark again, setting an all-time high since the listing of nickel in Shanghai. At present, although the growth rate of consumption in the downstream new energy sector has slowed down, it is still in a state of steady growth as a whole. While stainless steel shows a bottoming rebound trend, coupled with the alloy, electroplating consumption is also relatively stable, in the macro preference and domestic nickel plate inventory shortage of phased stimulation, Shanghai nickel strong upward and break through new highs.

Indonesia plans to impose export duties on ferronickel

According to foreign media reports, Indonesia's Deputy Minister of Ocean and Investment Septian Hario Seto said the government may start imposing export duties on Nickel Iron in 2022. Seto said that if the price of nickel was above $15000 a tonne, an export tax of 2 per cent, or $300,300 a tonne, would be levied, and the tax would increase in direct proportion to the price of nickel. The tax is designed to encourage nickel miners to process products before shipping overseas, otherwise Indonesia's nickel reserves will soon be depleted. As soon as the news was released, the price of LME nickel rose to around $22700 / ton, causing heated discussion in the market.

Since Indonesia banned the export of nickel ore in 2020, Indonesia has become the main source of China's nickel-iron import. As of January to November 2021, China's total imports of ferronickel were 3.3891 million tons, an increase of 9.22% over the same period last year. Among them, imports of ferronickel from Indonesia were 2.8464 million tons, an increase of 15.15 percent over the same period last year, accounting for about 84 percent of China's total imports of ferronickel. Once Indonesia's export tariffs are raised, it will greatly increase the import cost of Ferro-nickel.

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In addition, starting from 2021, Indonesia has repeatedly proposed to develop a local nickel industry chain and increase the added value of products, which may increase the probability of implementing export taxes. However, at present, as the implementation of the policy requires market acceptance, time and many other factors, it is unlikely to levy taxes in the short term, but the spread of the above news will still have a large positive impact on the short-term market.

The price of raw materials shows an increasing trend as a whole.

In terms of nickel mines, the spread of the COVID-19 epidemic combined with the impact of the rainy season, resulting in low overall supply in the Philippines, the main exporter of nickel ores, coupled with the recent high nickel iron and nickel prices rising downstream to support the mine price mentality, FOB prices are mainly raised at a high level. For the time being, the focus of negotiations between buyers and sellers is around US $75mur80 / wet ton at the Ni:1.5% mine.

In terms of Ferro-nickel, the quotation is strong under the cost support of the Ferro-Nickel plant. Although there is a concentrated reduction in stainless steel production, it is offset by the new demand for two projects of Jiangsu Delong stainless steel. On the other hand, in Indonesia, Qingshan Group accelerated the construction of stainless steel and superimposed the first quarter of the supporting Aeon annual production of 700000 tons of cold rolling project to boost the development of stainless steel and promote the demand for raw materials. In addition, Indonesia's increased sales of Ferro nickel to South Korea, India and other places, as well as the commissioning of high nickel matte, the two major increments in Indonesia in the first quarter have limited supply resources to other domestic steel mills, which still has effective support for a new round of domestic ferronickel transactions.

In terms of nickel sulfate and ternary precursors, the "bargaining" between downstream batteries and new energy enterprises is intense. Although the rise in raw material prices suppresses the growth of downstream production and demand, it still shows a trend of growth as a whole. While the supply of raw material MHP and nickel scrap resources is still tight, under the background that enterprises are restricted by resources and equipment, the price of nickel sulfate remains high, which makes the nickel price behind nickel beans have a reason to go higher.

Inventory continues to decline as a result of the closure of the import window

As of January 14, Jinchuan Nickel quoted 4500mur4,700 yuan / ton for Shanghai Nickel 2202 mainstream sticker, and Russian Nickel for Shanghai Nickel 2202 mainstream bid 1600mur2000 / ton. In terms of inventory, the total inventory of refined nickel decreased by 471t to 9161 t from the previous week, 4.89% from the previous week and 59.34% from the same period last year, once again to the lowest level in the past five years.

At present, although the shortage of spot resources has led to the high level of nickel board spot water, but in this case, in the week of January 14, warehouse receipt inventory rose, the problem of insufficient delivery is extremely obvious. At the same time, the high price of overseas US dollar nickel makes domestic imports continue to lose money, and import resources are relatively limited. At present, the nickel plate dollar rising water at 450 murals 550 U.S. dollars / ton level, as of January 14, the week, the nickel plate import loss of 400 thousand yuan / ton between. At the same time, LME nickel continued to rise, as overseas nickel prices continued to rise, import losses, import window continued to close.

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Considering the above factors, the price of ferronickel rebounded due to the continuous tight supply of nickel ore. Although the demand side of stainless steel production has declined in the short term, there is still a demand for replenishment before the Spring Festival, the cost of nickel sulfate continues to rise, and the quotation is expected to rise. At the same time, in the case of continuous decline in global inventories, domestic nickel prices are expected to maintain a strong oscillation pattern in the short term.

Author: Wang Zhiqiang

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