SMM Minutes: Pandemic Strikes Again, Transactions and Transportation of Spot Market Restricted

On the supply side: Due to large import losses, NORNICKEL nickel, Sumitomo, NIKKELVERK nickel and Nickel briquette could not pass customs clearance, the market was in shortage of pure nickel. NPI: As nickel ore prices climbed, it gave enough support to ferro-nickel prices. On the demand side, prices of pure nickel remained high, leading to the downstream hesitate. Downstream manufacturers were waiting for the prices to fall and that nickel sulphate plants and precursor plants had reduced production. In terms of stainless steel, transport and spot transactions were restricted due to the pandemic. Comprehensively, nickel upstream and downstream showed a weak trend of supply and demand. On Mar 17, LME nickel reached limit down after the opening. SHFE nickel is expected to maintain fluctuations.

Refined nickel: On Mar 17, SHFE 2204 nickel moved rangebound around 219,500 yuan/mt in the morning. According to SMM's research towards upstream and downstream as well as collective enquiries from market traders on Mar 17, Jinchuan stood at 4,000-4,500 yuan/mt, up 250 yuan/mt from Mar 16. NORNICKEL nickel stood at 4,000-4,500 yuan/mt, up 550 yuan/mt from Mar 16. Spot transactions were weak on Mar 17. The current imports maintained large losses. Because NIKKELVERK nickel and NORNICKEL nickel were unable to pass customs clearance and flow into the domestic market, leading to the shortage of supply, NIKKELVERK nickel didn’t have quotations in today’s market. At present, the reducing supply of NORNICKEL nickel has led to the opearation losses of Jinchuan and NORNICKEL nickel. In terms of nickel briquette, the spot market quoted at 5,000-6,000 yuan/mt. Traders began to ship, but the downstream large factory had not enough inventory with low purchasing willingness to. There were few transactions in the spot market today.

NPI: On March 17, SMM average price of high-grade NPI was 1,625 yuan/mtu (ex-factory, tax included), down 10 yuan/mtu from that of Mar 16. Prices of high-grade NPI remained high fluctuations and upstream and downstream could not agree on prices with prices fluctuated slightly. On the supply side, the rising nickel ore prices drove up smelting costs and gave support to ferronickel prices. On the demand side, accepted prices of steel mills were low with no mainstream transactions and delayed purchases. Intraday nickel prices were affected by sentiment and slightly declined but still at high. While the price spread of ferronickel was large, prices were difficult to fall. It is expected that ferronickel prices will range between 1,600-1650 yuan/mtu (ex-factory, tax included), and the market is waiting for the mainstream prices.

Stainless steel: On March 17, the stainless steel SS contract fell back from a high level, with the overall prices around the 19,800 yuan/mt. The spot market was affected by the pandemic, and market transportation and transaction were restricted. Stainless steel transactions in Wuxi market were light. But the current arrivals were also delayed with low inventory. The spots were weak in the supply and demand. 304 cold-rolled ranged from 20,100-20,500 yuan/mt, 304 hot-rolled at 19,600-19,800 yuan/mt, 316L cold-rolled at 31,200-31,400 yuan/mt, 316L hot-rolled at 30,300-31,000 yuan/mt. As a result of the decline in the prices of the futures contract, the premium and discount of futures and spot reverted to an average level of around 500 yuan/mt. As of 10:30 am (Beijing time), the SHFE SS 2204 contract stood at 19,740 yuan/mt, and the spot premiums in Wuxi were 530- 930 yuan/mt. (Spot prices of deburred edge products = Spot prices of burr edge products + 170 yuan/mt).