Some Salt Factories Sold Their Raw Material Stocks to Make up for Losses Caused by High Nickel Prices

SHANGHAI, Apr 21 (SMM) - Nickel prices fluctuated at a high level, and the import window was still closed. The shortage of spot pure nickel in China has not yet been effectively resolved. Under the high prices of pure nickel, the market maintained purchases on rigid demand, and pure nickel inventory kept falling. The cost of nickel sulphate has recently increased along with the rising nickel prices, but the finished product prices have only risen slowly under depressed downstream demand. Some salt enterprises had to sell their raw materials to make up for the losses. The stainless steel segment has also shown a relatively weak market demand in recent days. Nickel prices continue to run at high prices, which, however, cannot be reflected in the terminal sectors. A deviation of the fundamentals from nickel futures prices has led to unhealthy development of nickel-based product market. But at present, nickel prices are unlikely to fall without an absolute accumulation of stocks. The prices are likely to hover at highs in the near future.

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. In the spot market, Jinchuan nickel was quoted at 241,800-244,400 yuan/mt, with an average price of 243,100 yuan/mt, down 5,150 yuan/mt from yesterday. NORNICKEL nickel was quoted at 241,500-242,600 yuan/mt, with an average price of 242,050 yuan/mt, down 5,150 yuan/mt from yesterday. Nickel briquette was quoted at 237,000-239,500 yuan/mt, with an average price of 238,250 yuan/mt, flat from yesterday. Yesterday, pure nickel prices fell mainly because of falling futures prices in morning trading. At present, pure nickel supply remains tight. Though the imports losses narrowed, even to small profits the afternoon before yesterday, the supply tightness will remain for the moment. In addition, there is a certain lag in the spot market compared with the futures market, resulting in little fluctuation in spot premiums. In terms of nickel briquette, the prices of nickel briquette continued to increase, and there has been little transaction in the market recently.

NPI: As of march 20, SMM average price of NPI was 1,625 yuan/mtu (ex-factory, tax included), flat from a day ago. On the supply side, the current prices of NPI have been firm, which is supported by multiple factors. First, the prices of nickel futures are still high, and the price difference between NPI and pure nickel has been great, which supports the NPI prices. Secondly, there is a shortage of spot in the NPI market, underpinning NPI prices. The prices of nickel ore and auxiliary materials were also high, which heightened the production cost. The high transportation cost due to the COVID is also among the causes of high NPI prices. On the demand side, the centralised procurement of steel mills has ended, but their inventory of raw materials is low. Coupled with the high prices of pure nickel and FENI as well as tight supply, steel mills preserve relatively sound demand for NPI. NPI prices are expected to remain rangebound at present.

Nickel sulphate: Domestic nickel prices remained high with strong upside momentum, while LME nickel liquidity was poor, with prices moving in a narrow range at high. SHFE nickel rose to repair the SHFE/LME price ratio. The cost of nickel salt rose along with the booming nickel prices.

This week, nickel salt prices rose along with inflating cost, but the upside momentum was depressed by sluggish downstream demand. Nickel salt manufacturers greatly curtailed their production due to operation losses, as raw material suppliers were firm to their prices. Nonetheless, the actual situation of salt manufacturers varied based on their individual cost and financial status.

Nickel prices are likely to remain high amid tight pure nickel supply. And nickel salt cost will also hover at a high level despite slight correction of raw material prices. Hence the nickel salt prices are expected to remain high.

Stainless steel: The SS contract dropped, but still hovered above 20,000 yuan/mt. Spot prices in Wuxi were relatively stable with some downside potential. The prices of 304 cold-rolled coils moved between 20,200-20,500 yuan/mt, and the prices of 304 hot-rolled coils were between 19,700-19,800 yuan/mt. Among them, the prices of stainless steel warrants were still lower than the spot prices, and warrants with a thickness of 0.68mm were quoted at 19,600-19,700 yuan/mt. The spread of cold and hot rolled coil was basically maintained at 400-500 yuan/mt. At present, the guide prices of Delong Steel were maintained at around 20,200 yuan/mt (base prices), but the market quotations were at 19,900 yuan/mt (base price) at the low level. The poor market transportation and the difficulty in receiving goods of the downstream have shadowed the market sentiment. At present, the market transactions were mostly the circulation of goods between traders, and there were few downstream orders. As of 10:30 am (Beijing time), the SHFE SS 2205 contract stood at 20,120 yuan/mt, and the spot premiums in Wuxi were 250 - 550 yuan/mt. The spot - futures spread narrowed after SS contract prices corrected. (Spot prices of deburred edge products = Spot prices of burr edge products + 170 yuan/mt).