Nickel Prices May not Remain High amid the Rising Supply and Weak Demand

SHANGHAI, Jun 10(SMM) -

At the opening of the market today, metals fell across the board, and SHFE nickel led the decline. With the increasing inventory and weak demand, whether nickel prices will remain stable or not? SHFE nickel once fell by more than 3%. As of 10:41, the decline narrowed to 2.7%. LME nickel end 3% lower at $27,930/mt on June 9.
 

Spot market

The average spot price of SMM1# refined nickel stood at 219,150 yuan/mt today, down 1.33% from yesterday and down nearly 3.8% in three trading days.

On June 9, spot premiums for Jinchuan moved between 4,700-5,000 yuan/mt with the average price at 4,850 yuan/mt, down 400 yuan/mt from the previous day. The spot prices of NORNICKEL nickel moved between 4,700-5,000 yuan/mt with the average price at 4,850 yuan/mt, down 400 yuan/mt from the previous day. Spot premiums reduced slightly, mainly due to downstream sector unwilling to purchase at high. The spot transactions were fair amid the declining market prices and spot premiums. 

In terms of nickel briquette, the prices of nickel briquette moved between 218,000-219,500 yuan/mt, down 4,250 yuan/mt from the previous trading day. The decline in nickel briquette prices was mainly due to the fall of market prices and spot premiums. The cost effectiveness of producing nickel sulphate by nickel briquette was not as good as producing intermediate products, while the mainstream raw material of the alloy is still nickel plate, resulting in almost no transaction of nickel briquette spot.

According to SMM data research, on the supply side, the domestic refined nickel output in May was 14,300 mt, a month-on-month increase of 10.59% and a year-on-year increase of 15.11%. The supply of pure nickel was slightly loose amid weak downstream demand. In terms of ferronickel, the cost of steel mills still hovers at a high level, but upstream sector has lower the prices as the demand is low. Meanwhile, the price difference among high-grade Indonesian NPI companies narrowed, and the gradual change of FENI pricing has eased the market supply.

On the demand side, the prices of stainless steel rose, followed by the Foshan market, but the transactions were still weak. In terms of alloys, spot prices of pure nickel hovered at a high level affected by the high SHFE nickel prices, and downstream purchases were lower than expected.

To sum up, the supply of pure nickel is rather loose compared with the weak demand side. In the short term, SMM expects that the nickel prices may not maintain the current high level.