SMM Morning Comment For Nickel Market On December 25

SHANGHAI, December 25 (SMM) –
Nickel prices fluctuated, closing slightly lower at 130,740 yuan/mt on last Friday. Nickel prices remained range-bound observed in the week ending December 15. Among other nickel products, nickel sulphate prices remained unchanged last week due to reduced inventory and weak downstream demand. While nickel salt prices stabilized, nickel prices saw a slight decrease last week, narrowing the price gap between the two once again. If this trend of narrowing continues, it might affect the production of electrowinning nickel from some externally sourced raw materials in the future. In a macro perspective, the recent outbreak of conflicts in the Red Sea region led several international shipping companies to announce the temporary suspension of routes through the Red Sea. The latest data indicates that, as of December 21, goods worth $105 billion (approximately ¥750 billion) have been diverted from this route. The Suez Canal to the Red Sea, a crucial international shipping passage connecting the Red Sea to the Mediterranean and controlling the transportation routes between Asia, Africa, and Europe, is one of the busiest waterways globally. The global nickel supply is mostly concentrated in Asia, with only a few products requiring transportation from Europe. Therefore, overall, the current Red Sea conflict has a relatively minor impact on nickel prices. From a fundamental perspective, refined nickel inventories both domestically and internationally increased last week. LME inventories rose by 6,882 mt compared to the previous week, while domestic SMM social inventories increased by 1,344 mt. Additionally, nickel prices rebounded compared to last month. Due to the ongoing decline in raw material prices, the profit margins for nickel plate production from externally sourced raw materials are increasing. As a result, factories reducing or halting production partially are now back in operation, leading to an increase in output. From the demand perspective, there was a slight increase in orders for electroplating and alloys last week. This is reflected in the active trading for Jinchuan nickel plates in the spot market last week. Regarding stainless steel, some major factories resumed production of the 300 series during December, and some enterprises increased their production schedules. In summary, current supply and demand are both on the rise, but the supply is increasing faster than demand, leading to a continuing trend of accumulating inventories domestically.