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The NPI Supply will be Gradually Surplus and the Pure Nickel Supply was still Tight
May 13, 2022 14:05CST
Source:SMM
On the supply side, the current overseas pure nickel maintained a loss state, and the long-term import loss led to the current shortage of NORNICKEL nickel spot. Although the production of domestic pure nickel was better than that in April, the supply of pure nickel remained tight as domestic pure nickel depends on imports. The downstream demand for NPI was weak, and the short-term prices remained volatile. With the subsequent reduction of steel mills and the obvious rising production in Indonesia NPI, the supply of NPI will be gradually surplus.

SHANGHAI, May 13 (SMM) - On the supply side, the current overseas pure nickel maintained a loss state, and the long-term import loss led to the current shortage of NORNICKEL nickel spot. Although the production of domestic pure nickel was better than that in April,  the supply of pure nickel remained tight as domestic pure nickel depends on imports. The downstream demand for NPI was weak, and the short-term prices remained volatile. With the subsequent reduction of steel mills and the obvious rising production in Indonesia NPI, the supply of NPI will be gradually surplus. As a result, the NPI prices were obviously going downward. On the demand side, stainless steel inventory increased significantly. Affected by the high cost, the spot prices were firm and the spot transactions were poor amid the pandemic. In terms of alloys, affected by the extreme market in March and April, the orders of alloy factories were delayed. The production gradually resumed with the rising SHFE nickel price in May. In the short term, the warmed up market supply and demand situation and the rigid demand for procurement in the downstream has given support for nickel prices. However, in the long term, the nickel prices will still be divorced from the fundamentals of supply and demand, and the long-term negative feedback from downstream manufacturers may return the nickel prices to the normal level.

Pure nickel: SHFE nickel 2206 contract went downward in the morning. In the spot market, Jinchuan nickel were quoted at 220000- 221300 yuan/mt, with an average price of 220650 yuan/mt, up 4650 yuan/mt. NORNICKEL nickel and nickel briquette were offered flat at 214,000- 215800 yuan/mt, and the average price was 214900 yuan/mt, up 400 yuan/mt. The Jinchuan was in premiums of 16,250 yuan/mt, up 4,250 yuan/mt. The NORNICKEL was in premiums of 10,500 yuan/mt, flat from yesterday. At present, the tight supply of pure nickel remained unchanged amid the import loss. Besides, the demand increased slight, so the premiums rose sharply amid the seller's market. Although the futures was still at low in high position, due to the rising premiums and the decreasing demand, the transactions were poor today.

NPI: As of May 12, SMM average price of NPI was 1,610 yuan/mtu (ex-factory, tax included). The downstream procurement demand was weak and the market transactions were poor. The NPI prices mained stable. On the demand side, the profit of stainless steel was limited, so the acceptance price of raw materials was low, which put a certain pressure on the NPI prices. In addition, steel mills have reduced production, reducing the demand for high priced raw materials, so the Npi rpices has declined. From the perspective of market supply and demand, the supply of high-grade NPI in May will be gradually sufficient, so the support will be weakened, and the nickel prices will go down. It is difficult for the NPI prices to maintain high and the NPI prices may fall in the follow-up.

Stainless steel: the spot prices of all series in Wuxi market maintained stable yesterday. The SS contract declined with the SHFE nickel. The market believed that although the NPI prices declined, the cost support was still strong. Therefore, the prices were still stable with only slight decline as it is believed that the stainless steel has little correlation with the negative expectation of the Fed's interest rate increase. The Wuxi market recently found a number of confirmed cases. The limited transportation of Jiangyin port mainly affected the hot-rolled coil and 201. 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 today, the spot price of 304 cold-rolled coils quoted at 20000-20300 yuan/mt and 304 hot-rolled coils were 19,700-19,800 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 19040 yuan/mt, and the spot premiums in Wuxi were 1595 - 1995 yuan/mt.     

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