Nickel Prices Fluctuated Wildly due to the Russia-Ukraine Conflicts

SHANGHAI, Feb 28 (SMM) - On the supply side, macro changes overseas are still affecting the market. The number of NORNICKEL nickel exported to China will increase in the future. In the short term, the situation that the domestic was less strong than overseas will exist. However, domestic nickel briquette spots are still expected to be tight.

Throughout the world, nickel supply in Russia and Ukraine is expected to be influenced and logistics problems will show very soon. On the demand side, the output of domestic steel mills and precursors increased, but the stainless steel spots remained slightly weak. The overseas market, especially the Ukrainian steel mills, will be influenced. Overall, spot prices of various kinds of pure nickels will be different.

The absolute price will fluctuate at a high level amid the logistics problems.

Pure Nickel: Last week, commodities were greatly affected by the Russia-Ukraine conflicts. SHFE 2203 nickel contract prices fell back, and fluctuated at 174,000-185,000 yuan/mt. Due to the expectation of US financial sanctions against Russia, NORNICKEL nickel originally exported to Europe was sold to China, alleviating the tight supply of domestic pure nickel. In the spot market, the trading last week was slack, and was mainly concentrated on Wednesday and Friday when the prices were low. The premiums of Jinchuan nickel in Shanghai increased slightly after Wednesday February 23, while NORNICKEL nickel kept declining. However, due to the fear of high prices, the trading of NORNICKEL nickel was less. Premiums of nickel briquette decreased, but there was almost no transaction. The main reason was the absolute price was high. The cost efficiency of in-house dissolution of nickel briquette in downstream nickel sulphate plants was still poor. The premiums of 2203 NORNICKEL nickel contract were 900-1,000 yuan/mt, premiums of Jinchuan nickel were 1,700-2,000 yuan/mt, and premiums of nickel briquette were 3,000-3,500 yuan/mt (switched to SHFE 2204 nickel contract).

NPI: There were some transactions in the market. The traded prices stood at around 1,530 yuan/mtu (tax included, delivery to factory), and in the short term, the trading basically stood firm at this price.

On the supply side, most goods in NPI plants were ordered, and there were few finished products. Traders had a small amount of NPI. The supply in the market was still tight. The cost of nickel ore would not fall because of the NPI plants’ rigid restocking demand.

The overhaul steel mills were about to resume production, so there will be a demand for raw material. In the middle of last week, the quotes fell, because the downstream market of stainless steel was slack, and the acceptable prices for NPI were lowered. The stainless steel prices cannot rise in the short term due to the sluggish market, which will put certain pressure on the raw material prices. Thus, the NPI prices probably will hover at the current level.

Nickel ore: There were a few transactions in CIF and FOB last week. The bidding prices of Ni 1.3% nickel ore rose slightly and stood at $53/wmt. The quotes for Ni 1.5% nickel ore on a CIF basis stood around $86/mt. The traded prices of Ni 1.4% nickel ore on a CIF basis increased too and stood at $78/wmt. 

The supply was tight because of less nickel ore in the market, and the output in the Surigao mining area was limited in the rainy season in the Philippines. Thus, nickel ore prices could hardly fall, and the FOB transaction was high. Moreover, the ocean freight was always high after the CNY holiday, which increases the cost of nickel ore, and the CIF price also showed an obvious upward trend.

On the demand side, the rainy season in the Philippines was about to over, raw materials inventories in NPI plants were relatively low, thus the nickel ore prices were firm due to the purchasing on demand. Besides, along with the rising NPI prices, the nickel ore prices are still high, and NPI plants’ acceptance of raw materials prices is relatively high and will be higher according to the NPI prices.

Nickel sulphate: Nickel prices in domestic and overseas markets underwent structural changes, and the nickel prices were high. The cost of battery-grade nickel sulphate fluctuated violently, but it did not reach the purchasing node last week, and the market transactions were slack. The supply of raw materials was still relatively tight. The market will begin the purchasing cycle this week. The prices of nickel sulphate will continue to rise. Traded prices of battery-grade nickel sulphate are expected to stand at 41,000-42,000 yuan/mt this week.

Stainless steel: Fundamentally, goods gradually arrived at the market, and the volume kept rising. However, the trading in the market remained slack because of the falling prices, and the stainless steel prices received great pressure. In the mid and long term, the new capacity on the supply side has not been released yet. But the output will increase MoM amid the full production of steel mills in March.

Stainless steel warrants premiums fell because warrants delivered in February flowed into the market. Premiums of shipments under warrants were quoted flat. Last Friday February 25, SS contracts fell again, and warrants premiums were lowered to discounts. The warrants were traded actively after the SS contacts fell below 18,000 yuan/mt. The supply of #300 cold hot-rolled was weak, even though there were some arrivals in steel mills last week. It was also known that due to the pandemic, some goods were stranded at ports. It is expected that there will be some goods arriving in the market this week.