SHFE Nickel Has Dropped 22% from Record High, Spot Transactions and Logistics Stagnate

SHANGHAI, Mar 29 (SMM)  - SHFE nickel extended its overnight losses after opening today, and once recorded a loss of 7% during the session. By midday close, the contract dropped 6.48% to 218,810 yuan/mt. It has fallen 22% from the historical high recorded on March 25.

Spot market: SMM 1# refined nickel average price stood at 220,900 yuan/mt today, down 2.79% from March 28 and down 15.6% from March 25, with spot offers falling a bit less compared with futures prices.

In terms of stainless steel, as far as SMM understands, spot prices have been falling. As of March 28, the spot prices in Wuxi were basically stable. 304 cold-rolled coil was reported at 20,700-21,200 yuan/mt, and 304 hot-rolled coil at 20,000-20,200 yuan/mt. As of midday, some institutions quoted cold-rolled coil at 20200 yuan/mt (base price), and some hot-rolled coil prices dropped to 19,900 yuan/mt. The overall market transaction was weak, and the downstream posted less demand. Existing transactions are mostly circulation of sources between the markets.

SMM believes that SHFE nickel will keep falling until it is back to the fundamentals.

On the supply side, spot transactions and transportation were delayed due to the pandemic. Against the background of deteriorating pandemic and the high uncertainty surrounding the spot market, the overall spot market transactions were weak. On the NPI side, the high cost of nickel ore played an increasingly important role in sustaining NPI prices. And there were hardly any transactions today.

On the demand side, the cost efficiency of self-dissolved nickel briquette was still poor. And there is possibility of output cuts in April. In addition, stainless steel mills’ operating rates are less than expected, further weakening the market transaction.

SMM believes that the nickel market supply and demand will remain weak in the near term.

[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]