Nickel Futures Reached a New High amid Russia-Ukraine Conflict

SHANGHAI, Mar 4 (SMM) - In overnight trading, nickel futures prices fluctuated at a low level after opening at high prices. Sanctions on Russia greatly affected the supply side. Pure nickel spot premiums in and outside of China rose significantly. It is expected that a small amount of pure nickel will arrive at ports in the bonded area in March, but the amount will be less in April due to limited delivery. The supply of nickel sulphate was tight. Downstream purchased cautiously because of the rising prices. However, downstream factories still needed to purchase when their inventories were gradually consumed. Therefore, domestic spot premiums still will rise. The nickel sulphate purchasing node has arrived, and the prices will continue to rise because of the declined in-house dissolution amount of nickel sulphate brought by the poor cost efficiency of nickel briquette. Nickel prices rise sharply due to the game in prices in the short term and the rising energy prices. Generally, nickel prices are unlikely to fall in the later period.

Pure Nickel:

In early trading, nickel futures dropped to 178,000 yuan/mt but quickly rebounded. In the spot market, Jinchuan nickel stood at 3,200-3,500 yuan/mt over the SHFE 2204 contract, with the average price of 3,650 yuan/mt, down 300 yuan/mt from the previous trading day. Premiums of NORNICKEL nickel stood at 3,000-3,100 yuan/mt over the SHFE 2204 contract, with the average price of 2,900 yuan/mt, up 150 yuan/mt from the previous trading day. Spots transactions were weak currently, mainly due to the increase of trading price yesterday and the higher absolute price of pure nickel. Shortage of NORNICKEL nickel in the market resulted in its rising premiums. The tight supply of nickel briquettes remained unchanged, and the premiums continued to rise. Spot premiums stood at 4,500-5,000 yuan/mt over the SHFE 2204 contract, and there was a little transaction in the market.

NPI:

On March 3, SMM average price of high-grade NPI was 1,495 yuan/mtu (ex-factory including tax), flat from the previous trading day. Recently, steel mills had no centralized purchasing nodes, so demand in the market remained sluggish and there were fewer transactions. The supply of NPI was tight, which supported the prices. Moreover, nickel ore prices were relatively high in recent days due to the high smelting cost aroused by NPI plants’ purchasing on rigid demand. Yesterday, stainless steel prices remained stable, and profits of steel mills were relatively low. Therefore, the rise of NPI prices will be limited, and it is expected the prices will remain weak at the current level in the short term. Nickel prices rose significantly yesterday, while NPI prices had limited momentum. Thus, the price spread between nickel and NPI may continue to expand, which can hardly be controlled by the market.

Stainless Steel:

Yesterday, stainless steel contracts rose to 18,200 yuan/mt at noon. In the spot market, stainless steel quotations were stable in early trading, and the market was quiet. Then, stainless steel prices rose along with the rising nickel prices, arousing the transactions in the spot market at noon. Some traders raised their quotes from 18,000 yuan/mt in early trading to 18,100 yuan/mt (base price). In early trading yesterday, #304 cold-rolled coils were quoted at 18,300-19,100 yuan/mt, and hot-rolled coils were quoted at 18,300-18,700 yuan/mt. As of 10:30 a.m. yesterday, the SHFE SS 2204 contract stood at 17,855 yuan/mt, and the stainless steel spot premiums in Wuxi were at 615-1,415 yuan/mt. (Spot price of deburred edge products = Spot price of burr edge products + 170 yuan/mt)