Price Spread of Pure Nickel between in and outside of China Changed Significantly

SHANGHAI, Mar 3 (SMM) - The most-traded SHFE nickel contract was pulled back in overnight trading. On the supply side, the slightly recovered nickel sulphate output still fell short of expectations. Tight pure nickel spots kept the premiums at a high level. On the demand side, the increase of precursor output exceeded that of nickel sulphate, but the production was still less than expected. Domestic demand for stainless steel grew slowly, but new capacity production of stainless steel increased. At present, the market is still keeping an eye on the sanctions against Russia from western countries, and the price spread between in and outside of China has changed significantly. Energy prices soared amid geopolitical crisis, accordingly, some commodities prices rose. In the short term, sentiment in the market and the fundamentals will support nickel prices.

Pure Nickel:

SHFE 2204 nickel contract fluctuated at a high level in morning trading. Spot premiums rose, and the quotes of pure nickel uniformly changed to that of SHFE 2204 nickel contract. Jinchuan nickel stood at 3,500-3,800 yuan/mt over the SHFE 2204 contract, with the average price of 3,650 yuan/mt. NORNICKEL nickel spot premiums stood at 2,800-3,000 yuan/mt over the SHFE 2204 contract, with the average price of 2,900 yuan/mt. Spots transactions were weak currently, mainly due to the increase of trading price today and the absolute price of pure nickel. The tight supply of nickel briquettes remained unchanged, and the premiums continued to rise. The spot premiums stood at 4,000-4,500 yuan/mt over the SHFE 2204 contract, and there was a little transaction in the market.

NPI

On March 2, SMM average price of high-grade NPI was 1,495 yuan/mtu (ex-factory including tax), flat from the previous trading day. After the CNY holiday, downstream demand for stainless steel fell short of expectations, and its price continued to decline.  The prices remained low but stable until recent days. Profits of steel mills were little, which restricted NPI prices. Steel mills, at the same time, held a wait-and-see attitude towards high-priced raw materials. NPI prices were supported by tight supply in the market and the high cost of nickel ore. Thus, NPI prices are expected to remain high and rangebound at low levels in the short term.

Stainless Steel:

Stainless steel futures prices stood around the 40-day moving average of 17,600 yuan/mt. Spot prices today remained stable. Prices of #304 cold-rolled coils moved between 18,300-19,100 yuan/mt, and the prices of hot-rolled coils were at 18,300-18,700 yuan/mt. The price spread between cold and hot-rolled coils returned to flat. The trading of stainless steel spots was not bad today. The trading of cold-rolled coils under warrants was favourable because of the low price, and prices of hot-rolled coil slightly decreased due to the arrival this week. As of 10:30 a.m. today, the SHFE SS2204 contract stood at 17,740 yuan/mt, and the stainless steel spot premiums in Wuxi were at 730-1,530 yuan/mt. (Spot price of deburred edge products = Spot price of burr edge products + 170 yuan/mt)

Nickel Sulphate:

Nickel and aluminium prices fluctuated greatly amid the tense Russia-Ukraine conflict. Recently, the import losses of nickel rose to 15,000 yuan/mt. Spot premiums of pure nickel in domestic increased as the import window was closed, and the premiums of nickel briquette soared to 4,000-4,500 yuan/mt with a rising trend in the following days. The rising cost urges the quotes of nickel sulphate to continue to increase. This week, prices of battery-grade nickel sulphate were 41,500-42,000 yuan/mt, up 500 yuan/mt from last Friday. The cost efficiency of in-house dissolution of nickel briquette was poor, thus the in-house dissolution amount of nickel sulphate declined. Therefore, the demand for purchasing nickel sulphate crystals increased. However, the supply of intermediate products and scrap were limited, the prices of nickel sulphate crystal rose accordingly. At present, the quotation of mainstream salt plants has risen to 42,000-42,500 yuan/mt. They are unwilling to sell at low prices. If there is no expectation of downstream reduction of production, prices of raw materials will continue to rise.