While LME Not Yet Open, Uncertainty Leads to Little Liquidity in Spot Market [SMM Nickel Morning Minutes]

In terms of supply, according to research, the supplies of NORNICKEL nickel, nickel briquette, NIKKELVERK nickel were in critical shortage, mainly due to the large price spread between SHFE and LME. In terms of NPI, it was more economical as a raw material of stainless steel, while the exports of Indonesia NPI to China decreased, domestic NPI manufacturers planning to increase output. Demand: High refined nickel prices led to losses and output cuts in downstream manufacturers and output cuts in some nickel sulphate manufacturers. Stainless steel: some manufacturers had plans to increase output with increasing demand of nickel. The price spread between LME and SHFE was still large, thus SHFE nickel prices would still fluctuate while the LME is not yet open.

Refined nickel: On Mar 15, SHFE nickel futures moved rangebound at 224,000 yuan/mt in morning trade. As for the spot market, Jinchuan nickel was in premiums of 4,000-4,500 yuan/mt to SHFE 2204, with an average of 4,250 yuan/mt, which was unchanged from a day ago. NORNICKEL nickel was in premiums of 3,500 yuan/mt over SHFE 2204, down 750 yuan/mt from a day ago. In addition, on Mar 14, transactions were rather poor, coupled with higher prices of nickel futures, which led to a small decline in premium and discount. Nickel briquette: Downstream was in low demand while upstream was not in a hurry for shipments, resulting in no quotations in the market. So the premiums were quoted at 3,500-4,500 yuan/mt according to the prices of SMM 1# refined nickel. Norway market was in premiums of 7,500-8,000 yuan/mt to SHFE 2204. The market was generally out of stock in Norway.

NPI: On Mar 15, SMM average price of high-grade NPI was 1,595 yuan/mtu (ex-factory including tax), flat from Mar 14. While NPI prices stood stable at high, the price trend was likely to remain upward stability. During Mar 15, SHFE nickel prices were in upward fluctuations and the market quoted high. But the upstream and downstream were difficult to agree on prices, so transactions were light. And excluding the rising sentiment brought by the soaring nickel, the supply of domestic stainless steel of nickel products was tight, while it was a support for ferronickel prices. In terms of the demand, downstream of stainless steel had positive purchasing sentiment. Stainless steel prices were bullish with profits for steel mills, giving raw materials up space.

Stainless steel: On March 15, spot prices in Foshan market were basically flat, while at noon, some traders of Foshan 304# increased the prices slightly. Due to Wuxi market increased the prices for many times, resulting in the same actions of Foshan market. Although the transactions were light and traders didn’t have clear reasons for the rising prices, which just a following action of the market. The opening of LME nickel today was major concern of the whole market. The market had no clear views about the price trend. But the transactions had reflected the expectations of market towards the later trend. The nickel futures and SS contract were rising rapidly, rebounding from the bottom. However, the current outbreak of the pandemic has been more and more tense, which affected the operation and transportation of the stainless steel market. The fundamental was deviated from the market. But if the opening of LME nickel surges again, prices of stainless steel may continue to rise. SMM believes that trend will be in stable fluctuations in the short term. State-owned 304/2B deburred coil prices are 23,000-23,800 yuan/mt. Private-owned 304/2B burred coil are 21,800-22,300 yuan/mt, 304/NO. 1(166.67cm)quoted at 21,800-22,000 yuan/mt. SHFE SS2204 contract stood at 20,000 yuan/mt at 10:30am. Premiums of Foshan stainless spot stood at -230 - 30 yuan/mt (spot deburred = burred + 170)