Nickel Prices Surged Again Despite Weak Supply and Demand

SHANGHAI, May 31 (SMM) - On the supply side, imports of pure nickel remained profitable this week, but the SHFE/LME ratio narrowed from 7.62 on Friday night to 7.55 last night due to the rise in LME nickel. The prices of raw materials for nickel sulphate dropped, and the prices of battery-grade nickel sulphate moved down following the cost. The average cost of salt factories fell. However, due to different raw materials and different pricing methods, the actual cost of salt factories still varies greatly. In terms of NPI, the falling stainless steel prices and the high supply of NPI pulled down NPI prices. On the demand side, after the prices of stainless steel dropped, downstream customers purchased just on demand. At present, traders’ inventory was relatively, while that at the steel mills’ was high. In terms of alloys, the current spot prices of pure nickel have continued to rise. The orders received by downstream manufacturers have been lower than expected due to the high nickel prices, hence had little demand. To sum up, the current pure nickel faces weak supply and demand. In the short term, nickel prices will remain rangebound.

Pure nickel: In the spot market, Jinchuan nickel was quoted at premiums of 8,000-9,000 yuan/mt, with an average price of 8,500 yuan/mt, down 1,000 yuan/mt from last week. NORNICKEL nickel was quoted at 6,000-6,500 yuan/mt, with an average price of 6,250 yuan/mt, down 1,400 yuan/mt from last Friday. Spot premiums of Jinchuan nickel and NORNICKEL nickel both dropped from the last trading day, while still remained high. The transactions of nickel plate were less satisfactory. In terms of nickel briquette, the prices were 221,500-222,500 yuan/mt, an increase of 8,500 yuan/mt from a day ago. At present, the cost efficiency of nickel sulphate produced with nickel briquette is not as good as those produced with intermediate products, and the current mainstream raw material for alloys is still nickel plates, so there is almost no transaction for nickel briquette.

NPI: As of march 30, the average price of high-grade NPI was 1,542.5 yuan/mtu (ex-factory, tax included), flat from a day ago, and is likely to fall in the near term. The prices of stainless steel and nickel both rose, but offered little boost to the spot market, and NPI prices lacked upside momentum. The falling stainless steel prices and the high supply of NPI pulled down NPI prices. The cost of NPI is still high, which underpins the prices to a certain extent. On the demand side, for steel mills, the decline in NPI prices will encourage the steel mills to purchase, but the current profit margin of stainless steel is still poor, and steel mills are more cautious in purchasing raw materials. NPI prices are expected to remain volatile with downward potential in the short term.

Stainless steel: Yesterday, the SS contract was boosted by the bullish macro front and broadly rising non-ferrous metals prices. But the spot prices were still falling, and the market players are still bearish. The warrants kept falling. And the downstream is still observing the situation and purchased only on demand. At the beginning of the week, the central bank issued a macro policy that is favourable for real estate, And due to the news of the resumption of work in Shanghai, the overall market is more optimistic about the recovery of consumption at the end of the second quarter. As a result, steel mills also took the initiative to raise the guide prices, taking the opportunity to firm the price. However, the stockpiles of steel mills are still relatively large. On the cost side, NPI prices dropped and stabilised for the moment, and nickel ore prices also showed signs of falling. As a result, cost support continues to weaken, and the supply in June may remain flat MoM. SMM believes that stainless steel prices may remain rangebound in the future.