Electrowinning Nickel Output is Expected to Increase Further While Nickel Prices Moved Downward

SHANGHAI, Apr 19 (SMM) - In March, nickel prices extended the weakness in the previous month but stopped falling near the end of the month under the support from macro front and fundamentals. On the supply side, as the SHFE/LME price ratio remained low in March, the import window was still closed and the amount of customs clearance of pure nickel was relatively limited. But the domestic refined nickel output increased by nearly 1.73% from February. On the demand side, pure nickel consumption in March by the alloy sector rose slightly month-on-month since the nickel prices were on a downward trend amid the resonance of bearish macro and fundamental factors.

Entering April, owing to the sharp price cut of SHFE nickel prices, some electrowinning nickel companies postponed the production schedules in the month on the shrinking profit margins of producing finished products with MHP or nickel sulphate. The demand did not boom as expected in March, but the downstream companies are generally optimistic about the consumption in April and alloy companies may be more willing to produce, which will further stimulate the demand for nickel plate.

In addition, in April, the stainless steel output may rise slightly. In early April, 300-series stainless steel profits have improved somewhat. Orders received by the state-owned stainless steel mills were acceptable, and some mills even ramped up the production. Therefore, the overall output of 300-series stainless steel in April will grow.

In summary, the pure nickel prices are unlikely to drop significantly in April amid the recovering downstream demand for pure nickel and the postponed electrowinning nickel projects. However, in the long run, the electrowinning nickel output will still increase, hence there is still room for a further decline in nickel prices.