Nickel Spot Market Stagnated amid the Money Game

SHANGHAI, Mar 9 (SMM) - Intraday LME nickel Tuesday once rose to more than $100,000/mt with a gain of over 100%. LME suspended the transactions of nickel futures by 16:00 pm, and announced in the evening that it will cancels all nickel trades executed on the OTC and LMEselect screen trading systems at or after 00:00am UK time on 8 March 2022 (8:00am Beijing Time on 8 March). The “mad” LME nickel yesterday as well as the great import losses due to wide SHFE-LME spread has killed all transactions willingness in the market.

On the fundamentals, the Russia-Ukraine conflicts are still expected to reduce the overall supply, and LME-denominated nickel products are also unable to enter China amid excessively high import losses. Though nickel prices may correct significantly in the short term after the current wrestling between longs and shorts come to an end, domestic nickel supply will stay tight until the SHFE/LME price ratio is back to normal.

Pure nickel: Yesterday, SHFE nickel futures hit limit up at 228,810 yuan/mt. There was no quotation or transaction in the spot market. It was difficult for traders and manufacturers to make quotations, and downstream purchases were also suspended owing to high prices. SMM raised the premium Tuesday according to the comprehensive survey of upstream and downstream and market traders, and the premiums of Jinchuan nickel and NORNICKEL mickel remained the same under extreme market conditions, with an average premium of 10,000-15,000 yuan/mt over the 2204 contract. In terms of nickel briquette, there was also no quotation or transaction. But the supply of nickel briquette is more tight, and considering the great import losses and the recent high premiums of briquette, the premiums for nickel briquette were 15,000-20,000 yuan/mt.

Nickel sulphate: Yesterday, SMM battery grade nickel sulphate and copper electroplating grade nickel sulphate were both quoted at 53,000-55,000 yuan/mt, and there were no inquiries in the market. Transactions stagnated. Affected by the unexpected rise in LME prices, the import of nickel salt was hindered. The current quotation of the salt factories is complicated. According to SMM research, China’s output of nickel sulphate stood at 25,000 mt in metal content, or 113,800 mt in physical content in February, down 4.08% from the previous month but up 66.0% year-on-year. In February, due to the combined effects of fewer natural days, longer holidays, and poor profits that forced some nickel salt factories to reduce the production, the output fell significantly. From the structure of raw materials, the proportions of nickel briquette and nickel powder declined significantly due to poor cost efficiency, and the proportion dropped to 42%.

Some companies said that according to the current nickel prices, they would stop using nickel briquette from March and suspend the operation of dissolution lines. The proportion of MHP and scrap increased, and the proportion of MHP rose to 36% in February. Macro sentiment fluctuations, coupled with capital disturbances, have sent nickel prices to new highs constantly in early March. For nickel sulphate, the pressure from the raw material side surged amid expanding SHFE-LME spread. The production in March will face greater uncertainties. The output of nickel sulphate is expected to stand at 26,000 mt in Ni content in March, up 4.3% MoM and 20.5% YoY. Concerns about the supply of raw materials have increased, and the production of enterprises is scheduled based on market situation.

Stainless steel: Nickel prices and SS contracts both touched the limit up, and the spot market also raised the prices significantly. But yesterday, most traders suspended their businesses and did not make shipments as the intraday spot prices rose from time to time. However, in terms of the market demand, the market inquiries and the circulation of goods were high, but the actual downstream purchases were relatively small, and even some processing plants have suffered losses. Prices of 304 cold-rolled coils moved between 22,000-23,000 yuan/mt yesterday, up 1,900 yuan/mt compared with a day ago, and the prices of hot-rolled coils were between 22,600 -23,500 yuan/mt, with the average price up 2,000 yuan/mt. The prices of 316L cold-rolled coil were 34,000-34,500 yuan/mt, up 3,650 yuan/mt on average.  As of 10:30 am (Beijing time), the SHFE SS 2204 contract stood at 21950 yuan/mt, and the spot premiums in Wuxi were 220-1220 yuan/mt. (Spot prices of deburred edge products = Spot prices of burr edge products + 170 yuan/mt)