Nickel Sulfate Price Reiview and Forecast

Price performance: The traded prices of nickel sulphate held stable last week, with an average discount of 100 yuan/mt against the SMM nickel sulphate price index. However, as upstream and downstream were in price negotiations, the price index fluctuated largely. The rising nickel prices pushed up costs, but the downstream rejected higher prices as supply and demand tensions eased compared with last month. In addition, the raw material discount coefficient loosened last week, causing the price index to fluctuate.

Fundamentals: The nickel sulphate supply increased steadily, in line with the expectations last week. Demand side, new energy vehicle sales increased by 20% WoW, with the penetration rate up 2% to 48%. The mediocre sales failed to make up for the previous sales decrease influenced by the Qingming Festival. However, highly anticipated Auto China may elevate the penetration rate to reach 50%. Battery cell inventory was already at a low level, with the inventory-to-sales ratio at around 2 months. If NEV sales rise optimistically, it will increase the demand for NCM materials. The NCM cathode output is expected to increase about 10% MoM in April, and will be concentrated in the medium- and high-grade nickel series. Last week, some precursor markers began to purchase raw materials for late April and early May. Inquiries were active, but inventory barely increased as supply was tight. On the cost side, high-grade nickel matte and MHP discount coefficients loosened but had limited downward room. Rising nickel prices led to higher costs for nickel sulphate producers, so their profits shrank. However, as the supply and demand tensions eased but not reversed, nickel sulphate producers’ profits will have limited downward room, supported by high nickel sulphate prices, and nickel sulphate prices will fluctuate in tandem with nickel prices.

Raw material side: 1) High-grade nickel matte: As Indonesia's production steadily ramps up, it is expected that the output will gradually rise this and next month. With the gradually ample supply in the future, high-grade nickel matte discount coefficient may loosen. The high-grade nickel matte prices last week held stable as the previous week. The current discount coefficient of high-grade nickel matte remained at around 84% against LME nickel, versus 83% for future cargoes. 2) MHP: Currently, traders have released some MHP that will arrive at ports in May and June. Affected by the expectations of intermediate product oversupply in the future and poor purchases since nickel sulphate producers had secured raw material in Q2, the MHP discount coefficient has loosened to 79-80%. However, as the supply and demand tension is not completely reversed in the short term, it is expected that the room for price concessions by sellers will be limited. Last week, rising nickel prices deteriorated profits of nickel sulphate, but provided support for nickel sulphate price hikes.

Please do not hesitate to contact Jean at jeantang@smm.cn or 86-19946295759 if you have any question or inquiry.