SMM Nickel Market Morning Comment Fully (Mar 27)

Overnight, the most-traded SHFE nickel contract opened at 132,880 yuan/mt, and closed at 131,780 yuan/mt, down 1,550 yuan/mt. Trading volume fell by 20,976 lots, and open interest decreased by 1,689 lots. From a macro perspective, the US Fed has kept the upper limit of its interest rate at 5.5%. The Fed once again maintained interest rates unchanged. Powell's speech has not disclosed when to cut interest rate. This interest rate decision will have little impact on the market. Fundamentally, the progress of nickel ore approval accelerated and production of intermediate product projects in Indonesia ramped up. The market's expectations for tight supply of raw materials began to weaken. On the other hand, affected by the sharp drop in nickel prices, transactions in the spot market picked up, and downstream purchasing sentiment recovered. Nickel price is expected to go down.

Nickel: During the trading session on March 26, the opening price of the main SHFE nickel contract was 132,880 yuan/mt, with a closing price of 131,780 yuan/mt, representing a decrease of 1,550 yuan/mt compared to the previous trading day's closing price. Trading within the session weakened compared to the previous trading day, with a decrease in trading volume by 20,976 lots and a decrease in open interest by 1,689 lots. This combination indicates that both long and short parties reduced their trading activities and leaned towards a wait-and-see approach, with the long side actively liquidating positions. The decrease in trading volume indicates rational unwinding of long positions, with no sense of urgency but rather a pursuit of ideal prices. Therefore, the market is expected to continue to experience a mild decline, with a higher probability of sustained downward movement. From a macro perspective, the decision on the upper limit of the US Federal Reserve interest rate recorded 5.5% as of March 20. The Fed once again maintained its stance, and Powell's speech did not reveal any clear interest rate cut timing, so the impact of this interest rate decision on the market was relatively minor. On the fundamental side, progress in nickel mine approvals has accelerated, and Indonesian intermediate projects have begun to release output gradually, leading to a weakening of market expectations for tight raw material supply. However, on the other hand, influenced by the sharp decline in nickel prices, the spot market transaction atmosphere has warmed, and downstream purchasing sentiment has recovered. Overall, it is expected that nickel prices will continue to fluctuate weakly in the future.

NPI: On March 26, the average price of SMM 8-12% NPI was 933.5 yuan/mtu (factory including tax), a decrease of 9 yuan/mtu from the previous working day. From the supply side, although the approval speed of nickel ore quotas has recently accelerated significantly, it still takes time from the mine to the smelter, so it is expected that NPI production in March will still be at a low level. However, due to the sustained low demand in the domestic terminal, some traders and iron factories have lowered their quotations. From the demand side, the stainless steel terminal demand has continued to be weak this week, thus not providing support to the NPI. Overall, the current stainless steel terminal demand remains weak, leading to an accumulation of supply, and the current NPI prices are expected to be weak.

Nickel Sulfate: On March 26, the SMM battery-grade nickel sulfate index price was 30,711 yuan/mt, unchanged from the previous working day, with the price of battery-grade nickel sulfate ranging from 30,500 to 31,000 yuan/mt, with an average price unchanged from the previous working day. Inquiry activity remained relatively high this week, with downstream actively procuring raw materials for early April. Although the prices of raw materials remain stable, the profit of nickel sulfate products has been restored, and the upward driving force of nickel sulfate prices from the cost side has weakened. Influenced by the downward fluctuation of nickel prices, downstream sentiment towards high-priced nickel sulfate is increasingly cautious, but the tension between supply and demand has not completely eased for the time being, putting pressure on nickel sulfate prices.

Stainless Steel: According to SMM research on March 26, today's stainless steel spot prices continued to decline. Although both Qingshan and Delong have limited price requirements for agents, with high social inventories and poor downstream demand, market price reductions are difficult to stop. There are even some small traders exiting the market to transact at prices far below the mainstream, indicating strong weakness in the stainless steel supply. Stainless steel prices will continue to be weak. On the same day, 304 cold rolled in Wuxi was reported at 13,400-13,800 yuan/mt, 304 hot rolled in Wuxi was reported at 12,900-13,000 yuan/mt, 316L cold rolled in Wuxi was reported at 24,100-24,400 yuan/mt, 201J1 cold rolled in Wuxi was reported at 8,600-8,800 yuan/mt, and 430 cold rolled in Wuxi was reported at 8,100-8,200 yuan/mt. SHFE 10:30 SS2405 contract price was 13,375 yuan/mt, with a premium of 195-495 yuan/mt for Wuxi stainless steel spot (cut-off = raw edge + 170 yuan/mt).