Nickel Prices Exceeded 200,000 yuan/mt amid Exacerbated Russia-Ukraine Conflict

SHANGHAI, Mar 7 (SMM) - If Russia starts to promote and use Chinese UnionPay, the expected tension in domestic may be eased when actual policies are implemented. If Russia starts to promote and use Chinese UnionPay, the expected tension in domestic may be eased when actual policies are implemented. At the same time, the import losses and logistics problems will still be reflected in the import volume of ferronickel, thereby aggravating the raw material shortage domestic. On the demand side, the rapid increase in price made the short-term downstream purchasing enthusiasm decline and weakened the trading. However, if the supply problem is difficult to solve in the short term, the downstream will have to purchase or reduce or stop production when the inventories are low. In the corresponding downstream sectors, the rising raw materials prices drove up the prices of stainless steel. However, the cost transmission was relatively smooth, so it is expected that the reduction and shutdown will be limited. In terms of nickel sulphate precursors, small factories had the expectation of reducing production, while the expectation of reducing production in large factories was weak because they had the demand of delivering orders. The prices of nickel sulphate are expected to continue to rise in the purchasing node. Overall, the nickel price is rising rapidly, and it may be pulled back considering the capital. But the general trend of nickel prices is still strong.  

Pure Nickel:

On March 4, nickel futures opened at around 187,000 yuan/mt in the early trading. In the spot market, Jinchuan nickel stood at 3,200-3,500 yuan/mt over the SHFE 2204 contract, with the average price of 3,350 yuan/mt, flat from the previous trading day. Premiums of NORNICKEL nickel stood at 3,100-3,200 yuan/mt over the SHFE 2204 contract, with the average price of 3,150 yuan/mt, up 100 yuan/mt from the previous trading day. Spots transactions were weak currently, mainly due to the increase of trading price 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 4,800-5,100 yuan/mt over the SHFE 2204 contract, and there was little transaction in the market.

Nickel Ore:

The average price of Ni 1.5% Philippine laterite nickel ore stood at $87.5/wmt last week, up $1.5/wmt on the week. The nickel ore prices remained in an upward trend. The market heard a few transactions last week. The mainstream CIF transaction prices of Ni 1.4% nickel ore stood at around $80/mt. The rising ocean freight drove up the nickel ore costs, pulling up the prices. On the supply side, the rainy season in the Philippines has not yet ended, and it is difficult for the supply of nickel ore to increase, so the prices are unlikely to pull back. In addition, LME nickel prices rose sharply, and SHFE nickel prices hit new highs last week, which prompted the mines to hold firmer to the prices. On the demand side, some NPI plants had to purchase nickel ore at high prices on rigid demand as their ore stocks were exhausted by the end of the rainy season. The NPI prices were rising as well, bringing rich profits to the plants. The lower prices of auxiliary materials also provided upward room for the nickel ore prices. The nickel ore prices are expected to keep rising significantly in the short term, as the NPI prices may rise steadily. The nickel ore prices have strong upward momentum amid surging nickel prices, tight supply, and higher ocean freight costs. The CIF prices of Ni 1.5% nickel ore are expected to move between $88-93/wmt this week. 

NPI:

The SMM average price of 8-12% high-grade NPI stood at 1,515 yuan/mtu (ex-works, including tax) on last Friday March 4, up 2.5 yuan/mtu from a week earlier, and the average price of Indonesia NPI stood at 1,525 yuan/mtu (including tax, delivery to ports), 12.5 yuan/mtu higher than a week earlier.

There were few market transactions during the week, but the prices fluctuated little. At the beginning of the week, the downstream transactions of stainless steel were light, and the stainless steel prices remained in a steady downward trend after continuous price cuts, which dragged down the NPI quotations. However, there was still a supply gap in the market, and the NPI prices were unlikely to drop significantly. The nickel prices started to rise strongly on Thursday March 3, boosting the stainless steel market and driving up the NPI prices. The NPI prices are expected to rise further in the short term. The supply of refined nickel and Feni may be affected by the intensifying international conflicts, and their prices will move upward. In this case, the steel mills may choose to purchase NPI for its cost effectiveness, which will drive up the NPI prices amid strong demand but limited supply. Meanwhile, the overseas steel mills are likely to purchase NPI from Indonesia due to high LME nickel prices, and the prices of Indonesia NPI may surpass domestic NPI prices significantly. The NPI prices are expected to move between 1,520-1,560 yuan/mtu (tax included, ex-factory) this week. 

Stainless Steel:

SS 2204 contract moved rangebound at a high level around 18,700 yuan/mt. Spot prices of cold hot-rolled increased one after another at noon on Thursday March 4 and generally rose by 400 yuan/mt. Prices of 304 cold-rolled coils moved between 18,800-19,400 yuan/mt with the average price increasing 400 yuan/mt, and that of hot-rolled coil were 18,700-19,000 yuan/mt with the average price rising 400 yuan/mt. Quotes of 316L cold-rolled were 29,500-29,700 yuan/mt with the average price increasing 700 yuan/mt, and the average price of 316L hot-rolled was quoted at 150 yuan/mt. Last Friday March 4, the price spread between cold-rolled coil and hot-rolled coil returned to normal, and the price of cold-rolled coil was higher than that of hot-rolled coil by 100 yuan/mt. The trading was slightly weaker than that of Thursday March 3 afternoon, but the overall transaction was acceptable, and there were some traders did not sell the full rolls. As of 10:30 a.m. last Friday, the SHFE SS 2204 contract stood at 18,735 yuan/mt, and the stainless steel spot premiums in Wuxi were at 235-835 yuan/mt. (Spot price of deburred edge products = Spot price of burr edge products + 170 yuan/mt)

Nickel Sulphate:

Nickel prices fluctuated wildly due to the Russia-Ukraine conflict. Last week, the import losses of nickel rose to 20,000 yuan/mt. Spot premiums of pure nickel in domestic market increased as the import window was closed, and the premiums of nickel briquette soared to over 5,000 yuan/mt with a rising trend in the days to come. The raw material of nickel sulphate basically depends on imports, and the US dollar pricing system greatly booms the cost of nickel sulphate at present when the import losses are huge. Last Friday March 4, quotes of battery-grade nickel sulphate were 42,500-44,000 yuan/mt, up 2,000 yuan/mt from the previous Friday February 25. Certainly, it is difficult for the downstream sectors to accept the prices. However, the cost efficiency of in-house dissolution of nickel briquette was poor, and small-sized companies stopped purchasing the nickel briquette. So the market demand for nickel sulphate crystal increased. It is expected that the cost will continue to rise this week, pushing up the prices of battery-grade nickel sulphate to 42,500-45,000 yuan/mt. Last Friday March 4, the prices of electroplating-grade nickel sulphate were 43,500-45,500 yuan/mt, up 1,000 yuan/mt from last Friday February 25. The price increase of electroplating-grade nickel sulphate was far less than that of battery-grade nickel sulphate, mainly due to the slower recovery of demand in electroplating industry, the poor demand in the market, and low operating rates at electroplating companies. However, prices of electroplating-grade nickel sulphate will also continue to rise along with the increasing nickel prices.