SHFE Nickel Stopped Falling and Pure Nickel Prices are Unlikely to Fall Sharply amid Weak Fundamentals

SHANGHAI, Jan 12 (SMM) - The most-traded SHFE nickel contract fell from high level since January 5 due to the news of Qingshan Nickel increasing the production. Nickel prices stopped falling and rose 1.12% yesterday. At the night of January 10, LME nickel closed with losses of 0.72%.

On January 11, SMM 1# refined nickel stood at 216,700 yuan/mt, up 0.35%. According to SMM, on Junuary 11, Jinchuan nickel were quoted at 12,000-14,500 yuan/mt, with an average price of 13,250 yuan/mt, up 500 yuan/mt from the previous trading day. NORNICKEL nickel was quoted at premiums of 6600-7300 yuan/mt, with an average of 6950 yuan/mt, down 150 yuan/mt from a day ago. The transactions were thin amid the approaching Chinese New Year.

Fundamentals

On the supply side, the spot supply of overseas pure nickel was tight. Although the import window was still closed, the losses narrowed about 10,000 yuan/mt as of January 10.

Due to the active transactions in the early stage and the output cuts of domestic NPI plants in December, SMM data showed that the total NPI supply in December decreased about 1,700 mt in metal content from the previous month. At the same time, the signing of orders of Indonesia NPI was basically completed, and the spot supply in January may remain tight.

In terms of NPI plants, due to the high prices of nickel ore, rare shipments of nickel ore from the Philippines during the rainy season and the increasing electricity costs, the NPI plants with costs held the prices firm. According to SMM data, in October and November 2022, the imports of nickel ore from the Philippines decreased and that in November decreased about 640,000 mt compared with September.

On the demand side, on January 10, as the futures prices of stainless steel were high, the spot prices rose slightly. However, most market players were on holidays and thus the spot transactions were weak and the actual transaction prices were basically stable. In terms of the alloy side, the current restocking was basically ended the market demand declined.

In summary, SMM expects that the short-term nickel prices are unlikely to fall sharply amid the tight supply and weak demand as the bears on the news front have been paid off.