Overnight SHFE Nickel Dropped on Expectations of Shrinking Demand

Published: Mar 30, 2022 11:23 (GMT+8)

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Overnight SHFE nickel dropped with capitals withdrawing from the market. SHFE nickel has basically returned to the fundamentals, and lacks upside momentum in the short term.

SHANGHAI, Mar 30 (SMM) - Overnight SHFE nickel dropped with capitals withdrawing from the market. SHFE nickel has basically returned to the fundamentals, and lacks upside momentum in the short term.

On the supply side, the downstream was cautious amid steep ups and downs of spot pure nickel. The sustaining import losses have led to the scarcity of nickel briquette. Sumitomo and NIKKELVERK nickel supply remained tight. In terms of nickel pig iron, the prices fell slightly due to falling SHFE nickel yesterday. But as the current smelting cost is high, the upstream is willing to hold firm to the prices. At present, the acceptable prices of upstream and downstream are quite different, and the transactions in the spot market has been muted.

On the demand side, due to the impact of the pandemic, the steel trading market in Wuxi has been closed for closed-off management. The centralised procurement of stainless steel plants has not yet come, and the overall transaction was poor. In terms of nickel sulphate, the cost efficiency of self-dissolved nickel briquette has not yet recovered, and the production of nickel sulphate showed signs of reducing. At present, some precursor plants still have procurement needs at the end of the month. However, in the context of the sharp fluctuations in nickel prices and the severe pandemic, the procurement cycle is forced to be postponed. To sum up, the current pandemic and the recent sharp fluctuations in SHFE nickel have had a greater impact on the supply and demand in the spot market.

Pure nickel : As the recent futures prices have deviated from the spot supply and demand pattern, SSMM now suspended offering premium/discount quotations of 1# Jinchuan nickel, 1# imported nickel and nickel briquette. SMM prices of 1# refined nickel, 1# Jinchuan nickel, 1# imported nickel are available as usual. This notice complies with IOSCO standards. Yesterday, Jinchuan and NORNICKEL nickel were offered at 219,800-222,000 yuan/mt, and the average price was 6,350 yuan/mt lower than the previous day. At present, the money game in the futures market has not subsided, and the prices fluctuate greatly. The prices of nickel briquette stood at 216,800-219,000 yuan/mt yesterday, and the average price was 6850 yuan/mt lower than a day ago. At present, the cost efficiency of nickel briquette has not yet recovered, and the expectation of downstream procurement is not optimistic. There were few quotations from traders amid violently fluctuating SHFE nickel prices.

NPI: As of march 29, SMM average price of NPI was 1630 yuan/mtu (ex-factory, tax included), down 5 yuan/mtu from a day ago. The intraday SHFE nickel and ss2205 contracts both fell as the downstream turned away from high prices. But he upstream held firm to the prices. Hence the market transactions were thin amid wide difference of acceptable prices between the upstream and the downstream. The current prices of auxiliary materials and raw materials have raise the costs of NPI plants, offering suppor to NPI prices amid great price difference with pure nickel. The centralised procurement of downstream stainless steel plants has not yet come, and the high raw material prices have greatly squeezed the profits of stainless steel mills, which delayed the mills’ procurement demand. NPI prices are expected to remain volatile at a high level in the short term.

Stainless steel: The SS contract prices dropped. And the SS2205 contract fell back to around 20,000 yuan/mt. However, due to the impact of the pandemic, the spot market has had poor transactions. And Wuxi Dongfang Steel City was also closed yesterday, and relating staff have been quarantined. The spot market prices have been falling, but it failed to stimulate the market, and the transactions were still subdued. Spot prices in Wuxi were relatively stable yesteraday. The prices of 304 cold-rolled coils moved between 20300-20600 yuan/mt, and the prices of 304 hot-rolled coils were between 19700-20000 yuan/mt. As of 10:30 am (Beijing time), the SHFE SS 2205 contract stood at 20115 yuan/mt, and the spot premiums in Wuxi were 355 - 655 yuan/mt. (Spot prices of deburred edge products = Spot prices of burr edge products + 170 yuan/mt).

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