Overnight LME Nickel Gained More than 70% amid Tug-of-War between Longs and Shorts

SHANGHAI, Mar 8 (SMM) - On the supply side, problems like the supply and logistics in Russia and Ukraine, and the shortage of pure nickel remained. Futures have now been extremely amplified on raging market sentiment. LME nickel rose up to a historical high of $55,000/mt in Ni content. The imperfect overseas transaction rules urgently needs to be standardised in such extreme cases. On the demand side, the downstream stopped purchasing on absolute extreme market cases, and awaited the prices to return to rationality. However, if the downstream needs to deliver the contract, it still needs to purchase raw materials for production. Before the SHFE - LME price spread recovers, it is recommended to secure domestic raw materials as soon as possible to ensure normal production.

Pure nickel: The prices of nickel futures rose to the daily limit, and the closing price exceeded 210,000 yuan/mt. LME nickel prices also tested the high of $36,000/mt in morning trade, an increase of nearly 20%. SHFE nickel futures stood high, and the spot market premiums dropped slightly. Jinchuan nickel was in premiums of 3000-3,300 yuan/mt to SHFE 2204, NORNICKEL nickel was in premiusm of 2800-3,000 yuan/mt over SHFE 2204. However, there were few transactions in the market, and the market stagnated after SHFE nickel touched limit up. In terms of nickel briquette, the import losses were more than 40,000 yuan/mt, and the inventory was also low. At present, the market supply is still tight, and the spot premiums have been raised to 10,000 yuan/mt. The shipments were also low.

NPI: As of march 7, SMM average price of high-grade NPI was 1560 yuan/mtu (ex-factory, tax included), up 45 yuan/mtu from a day ago. The intraday market transaction was thin as the quotations were generally higher, mainly due to the support of nickel prices and the supply and demand pattern of NPI. NPI mills had no stocks in the short term, and the quotations have been rising supported by nickel prices. The rising stainless steel prices also offered support to raw materials prices from the demand side. In addition, the current SHFE - LME price spread has reached a historical high, hindering the imports of pure nickel and FENI and potentially dangering domestic nickel supply. The market may re-direct its attention to NPI with the highest cost efficiency, and try to make up for the demand for nickel. It is expected that the price of NPI will continue to rise in the short term amid strong demand and falling supply.

Stainless steel: As nickel prices rose to the limit up yesterday, SS contract also rose by more than 8%, touching 20,600 yuan/mt in morning trade. Driven by the synchronous rise of nickel and stainless steel prices, the quotations in the stainless steel spot market were chaotic in the morning, with varied price hikes, and some traders even suspended making shipments. The steeply rising futures prices have made it hard for spot traders to determine their quotations. On the other hand, some traders reported that the steel mills have not yet offered their purchase prices, and they worried that it would be difficult to restock after the current sources were sold out. However, under the high market atmosphere yesterday, most of transactions were for goods transferred between the markets, and the downstream transactions were scarce. Prices of 304 cold-rolled coils moved between 20,100-21,100 yuan/mt in morning trade yesterday, up 11500 yuan/mt compared with a day ago, and the prices of hot-rolled coils were 19,800-21,100 yuan/mt, up 1,600 yuan/mt on average. 316L cold-rolled coil were 30,200-31,000 yuan/mt, up 1,000 yuan/mt on average.  As of 10:30 am (Beijing time), the SHFE SS 2204 contract stood at 20030 yuan/mt, and the spot premiums in Wuxi were 240-1240 yuan/mt. (Spot prices of deburred edge products = Spot prices of burr edge products + 170 yuan/mt)