Absolutely Low Inventory Supports Nickel Prices

SHANGHAI, Jan 27 (SMM) - Nickel sulphate spot supplies have been tight currently as the production was cut on operating losses previously, according to SMM. Meanwhile, many PCAM (precursor of cathode active material) manufacturers managed to produce normally, and will maintain its output by way of self-dissolution or outsourced nickel sulphate post the CNY holiday. In this scenario, the demand for raw materials of nickel sulphate will stay high. And as the current increase in wet-process nickel intermediates and nickel matte is still limited, the raw materials that can be directly purchased and used are still mainly nickel briquettes.

As such, SMM believes that the nickel briquette demand will stay resilient, and SHFE and LME nickel briquette will keep dropping with a monthly decrease of over 5,000 mt. For nickel plate, domestic nickel plate supply was still tight, and the spot premiums have been high. Though Nornickel output has been resumed, the exports to China were still unchanged. Therewith, SMM believes that the futures contract will maintain a great backwardation on the ground of continuously falling pure nickel inventory. The futures market still favours the longs amid absolutely low inventory.