Nickel sulphate prices dropped by nearly 3,000 yuan/mt in June, SMM interpretation is here! [SMM Analysis]

On June 19, SMM battery-grade nickel sulphate index price was 30,512 yuan/mt, down 287 yuan/mt from the previous working day. The battery-grade nickel sulphate price ranged from 30,500 yuan/mt to 30,800 yuan/mt, with an average price down 350 yuan/mt from the previous working day. Recently, the nickel sulphate market has seen sluggish transactions. Nickel sulphate prices declined nearly by 3,000 yuan/mt in June.

Demand side, orders for ternary cathode precursors were lower than expected. Previously, ternary cathode precursor producers stockpiled raw materials in advance, but lower-than-expected orders led to an inventory accumulation of nickel sulphate. After painful experience last year, the downstream ternary cathode material industry chain has strictly controlled inventory. Therefore, precursor producers actively destocked and stopped nickel sulphate purchases. At the same time, some producers sold nickel sulphate in reverse.

Supply side, the sudden drop in demand led to nickel sulphate stock accumulation at nickel sulphate smelters. Therefore, nickel sulphate producers made concessions on prices, reflected both in prices and transaction discount coefficients. Currently, the market transaction discount coefficient for nickel sulphate is around 95%-97%. The difficulty in selling nickel sulphate also forced some smelters to reduce or halt production. Additionally, recent power restrictions in Zhejiang have negatively impacted the operating rate of some nickel sulphate plants, significantly reducing nickel sulphate production.

On the cost side, after nickel prices returned to fundamentals and plunged, nickel sulphate costs decreased notably. The speed of profit recovery for nickel sulphate plants exceeded expectations, further allowing larger price concessions and accelerating the decline in nickel sulphate prices.

In summary, in a market where both supply and demand weakened, the demand side was weaker. The significant pullback in nickel prices allowed nickel sulphate plants to make larger price concessions, which caused the current decline in nickel sulphate prices.