SHANGHAI, Jan 11 (SMM) - In December 2022, the prices of battery-grade nickel sulphate extended the downward trend in the second half of November. The reasons are as follows. The production ramp-up of car makers ended with the cancellation of NEV subsidies, which greatly reduced the demand for precursors. Ternary precursor manufacturers cut the production sharply. And some large integrated factories stopped outsourcing nickel sulphate and began to sell their salt stocks, weighing heavily on nickel salt manufacturers. Besides, small nickel sulphate manufacturers cut the quotes to dump their in-plant inventories of finished products and withdraw funds. The nickel salt producers, especially nickel salt solution manufacturers, were eager to ship amid the inventory pressure. Therefore, the overall nickel sulphate prices dropped rapidly. In terms of raw materials, apart from high-grade nickel matte and MHP that have already been settled based on nickel sulphate prices less processing fees (against SMM battery-grade nickel sulphate index), and some leading battery recycling companies have also begun to use the same method to buy scrap. The weaker cost support also forced the nickel sulphate prices to fall.
The demand for precursors will reach a trough at the end of January 2023, and nickel sulphate prices may keep falling inevitably. The transactions of small orders are muted, and the delivery of long-term orders of nickel salt has been completed. Therefore, it is expected that nickel sulphate output will fall greatly in January 2023 as some companies have begun to take the Chinese New Year holiday beforehand. Some large ternary precursor companies and integrated factories have made production reduction plans in January, and some may cut the output by 30%-40%. And ternary precursor enterprises have no demand for nickel salt before the Chinese New Year since they completed the stockpiling in December 2022. Nickel salt plants will bear greater pressure from in-plant inventories of raw materials that were bought at high prices earlier and the rapid fall in nickel sulphate prices in December 2022, and they will be less willing to ship at the year-end. In general, the poor demand for nickel sulphate in January 2023 can barely improve. Nickel salt companies will be reluctant to ship because of the high costs of finished products and low profit margins. The purchasing volume of nickel sulphate will decrease palpably MoM in January, but the price drop will be smaller than in December 2022 amid dip buying. SMM presumes that the nickel sulphate prices will move between 35,700-36,500 yuan/mt. (December SMM battery-grade nickel sulphate index MTD: 38,200 yuan/mt; December MHP coefficient MTD: 76.5% (against battery grade-nickel sulfate index)