SHANGHAI, Feb 11 (SMM) – On February 10, SMM1# refined nickel was quoted at 176,300-177,400 yuan/mt.

The overall transactions in the spot market were relatively sluggish, and the prices of NORNICKEL and Jinchuan nickel were the same. The premiums of Jinchuan nickel stood at 3,000-3,400 yuan/mt over the SHFE 2203 nickel contract, and that of NORNICKEL stood at 3,100-3,300 yuan/mt. The premiums of Jinchuan nickel have declined amid arrivals, while the premiums of NORNICKEL remain high due to the limited supply. However, the purchases are less active.

The market supply of nickel briquette remains tight, and there is no spot quotation. The market sees the transaction on the goods arriving at the end of February at a premium of 3,000 yuan/mt. The nickel briquettes are basically pre-sold. The quotations of high-grade NPI have risen by 35 yuan/mt to 1,460 yuan/mt, while the quotations of low-grade NPI stand stable at 4,950 yuan/mt.

Market news:

(1) The demand for nickel ore in Indonesia is expected to surge to 100 million mt in 2022, an increase of 20-30% from 2021. On February 9, the secretary general of Asosiasi Penambang Nikel Indonesia (APNI) said that at least four nickel plants will be operating in 2022, and the demand for nickel ore will increase. APNI expects that Indonesia’s nickel ore demand will reach 100 million mt in 2022, an increase of 20-30% compared to 2021. The construction of cathode precursor plants also supports the growth of nickel ore demand. Indonesian President Joko Widodo also established an electric vehicle battery factory in West Java province in September 2021. These downstream industries also provides new support for nickel ore demand.

(2) Huayou Cobalt recently stated that the high-grade nickel matte supply agreement signed between the company and Tsingshan has now begun to be implemented. The construction of Huake Nickel's pyro-metallurgy high-grade nickel matte project is progressing steadily as planned. Tsingshan signed a high-grade nickel matte supply agreement with Huayou Cobalt and CNGR on March 1, 2021. Tsingshan will supply 60,000 mt of high-grade nickel matte to Huayou Cobalt and 40,000 mt to CNGR within one year starting from October 2021. On January 24, 2022, the first batch of high-grade nickel matte products in Tsingshan Park in Indonesia was officially shipped to China.

(3) Tsingshan’s high-grade nickel matte project in Indonesia has received continuous attention from industry participants. Currently, high-grade nickel matte products are shipped and delivered to Zhongwei and GEM. The Tsingshan Morowali park is vigorously accelerating the production of high-grade nickel matte to provide new energy materials for more customers. It is expected that the market competitiveness of nickel smelting in the park will be improved, and the supply and demand relationship of raw materials in the downstream new energy industry chain will also undergo fundamental changes.

Outlook:

(1) The macro market sentiment is stable and improving, and the non-ferrous metals prices is generally moving upward. Follow-up attention will be paid to the Fed’s interest hike.

(2) From a fundamental point of view, the Contango of three-month LME nickel is at a historically high level, the global nickel inventory continues to fall, and the nickel prices is on strong support. The spot prices of stainless steel has stabilised, and some specifications are still out of stock. Some steel mills planned to reduce the production for overhaul during the Chinese New Year holiday, and the arrivals may rise sharply after the holiday. SMM will monitor the inventory and consumption of stainless steel.

The macro sentiments is positive, and the non-ferrous metals prices are in an upward trend. The expectations for the Fed’s interest hike will continue to support the prices. The domestic and overseas policies are worth attention.

The nickel inventory is at a historically low level, and the downstream users are resuming the production. Hence the nickel prices are likely to remain high on the fundamental support with wider fluctuations. The production progress of Tsingshan’s high-grade nickel matte project is worth attention.