Macro sentiment towards low inventory supports high nickel price [institutional review]

Spot: January 18 SMM1# electrolytic nickel quoted 165200-168600 yuan / ton. Before the festival, the downstream is basically ready, the spot market turnover is light, the market purchase is rare, and the spot rising water is basically stable today. Jinchuan nickel market spot quotation rose 4000-4500 yuan / ton, and Russian nickel spot water rose 1600-1700 yuan / ton to 2202 contracts. Nickel beans, the market spot is scarce, quotations are the supply of goods arriving next week, the average price is 1000-1200 yuan / ton, the market part of the high price quoted to 1500 yuan / ton. The market of high nickel iron was stable at 1362.5 yuan / nickel, while the price of low nickel iron was stable at 3950 yuan / ton.

Market news:

(1) Boliden, a Swedish mining company, said on Monday that it expected to resume nickel production at its Harjavalta smelter in Finland soon. On December 24 last year, the smelter was expected to stop production until mid-January due to an explosion caused by a process failure in the slag discharge system of the electric furnace. Production disruptions affected the company's operating profit by approximately $11.1 million and affected production in the fourth quarter of 2021. Mysteel estimates that the company produced 3500 metal tons of high nickel matte in the fourth quarter of 2021, compared with 20400 metal tons for the whole year, down 19.6 percent from the same period last year.

(II) in the face of rising global nickel prices, nickel mines, commercial participants in the upstream nickel industry, are actually experiencing delays in the approval of annual work plans and budget (RKAB). On January 14, 2022, Meidy Katrin Lengkey, Secretary-General of the Indonesian Nickel Minerals Association (APNI), revealed that of the about 300 nickel mining companies, only 5-6 companies had been approved by RKAB. In fact, RKAB should start running in October 2021 or three months before the end of the year.

(3) Nornickel, the world's largest refined nickel producer, said on Monday that although the Russian government added additional nickel export duties from August to December 2021, the company did not change its shipments of nickel products to Russian and foreign customers in 2021. Nornickel, which produces and exports refined nickel, concentrates and supplies nickel-containing semi-finished products to its Finnish plants, plans to report its 2021 metal sales on February 10th. Nornickel has said its production and exports in 2021 were affected by sudden floods at two of its mines and unrelated accidents at its processing plants.

Summary and prospects:

(1) in the macro aspect, the central bank cut the MLF&OMO interest rate by 10BP, which exceeded market expectations, which strengthened the determination of policy to stabilize growth, and the macro mood warmed up somewhat. Fed Powell spoke less than expected hawks, but the market did not change expectations of the Fed's liquidity tightening. Recently, low inventories support a sharp rise in nickel prices, currently running above the 160000 mark, but downstream stocks are basically coming to an end, and short-term volatility may increase.

(2) fundamentals, 1) LME nickel 3-month transfer fee is at an all-time high, global nickel inventories remain de-stocked, and nickel prices are still supported; 2) ironworks output still decreased at the end of the year, superimposed steel prices rebounded, downstream pre-holiday stock demand rebounded, nickel iron prices stabilized and rebounded; 3) stainless steel spot prices stabilized and rebounded, there are still some specifications out of stock, pre-holiday stock demand recovered. Merchants mainly shipped back funds at the end of the year, and some steel mills planned to reduce production and overhaul during the Spring Festival, but more stainless steel production was put into production in the middle of the year, and follow-up attention was paid to the production of stainless steel production capacity.

Overall, the central bank downgraded MLF, market confidence rebounded, overseas supply concerns remain, non-ferrous metals strong operation, follow-up attention to domestic and foreign policy trends and the progress of the epidemic. At present, global nickel inventory is at a historical low, new energy production and sales are improving, warehouse receipt low still increases the flexibility of nickel price rise, superimposed news disturbance on the supply side of Indonesia, short-term nickel price remains high, but stainless steel overhaul and production reduction is expected to remain, downstream stock is also coming to an end, follow-up attention to inventory and demand changes.

In operation, it is recommended to wait and see, callback to do more, not to chase high, low warehouse order pattern to pay attention to Shanghai nickel contract rolling opportunities, pay attention to risk control.

Focus on: downstream consumption, Indonesian ferronickel production, high matte project progress, macro news.

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