Nickel Sulphate Prices to Bottom out amid the Growing Demand

SHANGHAI, Jan 17 (SMM) - Nickel sulphate prices have trended lower since mid-November 2022. The prices crashed from the highest of 41,100 yuan/mt to 36,650 yuan/mt, down 4,450 yuan/mt. The main reasons for the long-term price drop are as follows. 1. NEV manufacturers finished the production ramp-up with the end of MEV subsidies, which further greatly reduced the demand for ternary precursors. Therefore, the precursor factories slowed down the purchases of nickel sulphate, resulting in an oversupply of nickel sulphate. 2. At present, the mainstream raw material suppliers set the MHP prices based on nickel sulphate prices less processing fees. The costs of nickel sulphate companies dropped, and the pressure was partially transferred to the raw material producers. 3. Traded prices of nickel sulphate between nickel sulphate companies and precursor factories trended lower near the year-end when the former needed to withdraw funds and dump inventories, dragging down the market prices of nickel sulphate.       

However, the demand for raw materials improved. Orders received by nickel ore companies have grown since January 2023, and the quotations of nickel ore rose slightly. Ore companies' finished products that are scheduled to be taken off the production lines in January and February 2023 are all booked, which suggests that the nickel salt enterprises still purchase on rigid demand. In addition, the improvement in the demand for raw materials is also related to the slower-than-expected release of raw materials by the producers. The commissioning progress of intermediate product projects in Indonesia has slowed down, hence the supply after the Chinese New Year will be low. Moreover, the inventory of finished products held by nickel sulphate manufacturers stood low amid the poor demand and production reduction, especially that of crystals. Therefore, nickel sulphate supply may shrink further owing to the greater demand from downstream companies after the Chinese New Year. And the prices are expected to bottom out. What's more, the news said that some companies use nickel sulphate to produce electrodeposited nickel, which may provide an upward momentum for prices of nickel sulphate which is not in substantial supply surplus.