The Tight Supply Has not Improved and Nickel Prices Remained High [SMM Morning Meeting]

SHANGHAI, APR 29 (SMM) - Recently, SHFE nickel remained high. Although nickel prices declined  early this week due to macro negative factors such as rising interest rate by US Federal Reserve and shrinking balance sheet still existed, the supply shortage still gave strong support to the nickel prices. The supply was still tight due to the overseas pure nickel supply shortage amid the import loss, and the low domestic operation rate of pure nickel. In terms of NPI, as the current ferronickel was not smooth, the NPI prices were high and the spot was tight. Some nickel sulphate manufacturers had serious losses, so the short-term supply was tight and was difficult to improve. On the demand side, affected by the pandemic, the cargo throughput of Shanghai port fell, so that the overseas orders of downstream nickel hydrogen manufacturers were forced to be postponed or cancelled. Meanwhile, the overall demand was weak as the increasing cost of alloy raw materials was difficult to be transmitted to the downstream. In terms of stainless steel, the pandemic in Wuxi hit again, and the uncertainty led to the further reduction in market transactions. To sum up, the continuous tight supply gave strong support to the nickel prices, while the weak demand put pressure on the nickel prices. It is expected that the nickel prices will remain high in the short term.

Pure nickel: The SHFE 2205 nickel contract fluctuated around 229,000 yuan/mt yesterday morning, and the overall fluctuation was relatively stable. In the spot market, Jinchuan nickel were quoted at 234,400- 237,100 yuan/mt, with an average price of 235,750 yuan/mt, up 4,200 yuan/mt from a day ago. NORNICKEL nickel and nickel briquette were offered flat at 231,900- 233,100 yuan/mt, and the average price was 227,650 yuan/mt, up 4,850 yuan/mt from a day ago. Yesterday’s price rise was mainly due to the futures rebound while the overall change of the premium was small. At present, the prices were high and the overall transaction and inquiry were poor. In terms of nickel briquette, the transactions were few as the nickel salt enterprises had less procurement for nickel briquette.

NPI: As of April 28, SMM average price of high-grade NPI was 1635 yuan/mtu (ex-factory, tax included), flat from the previous trading day. There were abundant transactions in the market during the week. Although the nickel prices fluctuated sharply, it had a limited impact on NPI, so the NPI prices remained high. The NPI prices were hard to decline amid the tight spot, remained downstream demand, and cost support. At the same time, affected by the transactions within the week, the current NPI prices basically maintained a small fluctuation. There were regional differences in the market quotation, but were still high on the whole.

Stainless steel: Yesterday, the spot prices of all series in Wuxi market were basically stable without significant adjustment. The trend of SS contract was stable with slight decline. However, although the futures rebound gradually in recent days, the consumption in the spot market remained weak, so the market quotation was still stable. Although it was close to May, it can not be the same as with the market in previous years as a number of confirmed cases were found in Wuxi. Some areas started to work from home again. The downstream was uncertain about the future market and dare not accept goods easily. At present, the downstream just purchased as needed. In the later stage, we still need to pay attention to the impact of logistics and pandemic on the market. In Wuxi yesterday, the spot price of 304 cold-rolled coils quoted at 20,000-20,300 yuan/mt and 304 hot-rolled coils were 19,700-19800 yuan/mt. The 316L/2B remained stable and was quoted at 31,100-31,300 yuan/mt in the morning. As of 10:30 a.m. (Beijing time), the SHFE SS2206 contract stood at 19400 yuan/mt, and the spot premiums in Wuxi were 770 - 1070 yuan/mt. (Spot prices of deburred edge products = Spot prices of burr edge products + 170 yuan/mt). 

[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.]