Jinchuan Nickel Premium Accelerates Decline, Market Transactions Sluggish [SMM Nickel Morning Brief]

January 20 Nickel Morning Meeting Summary

Refined Nickel:

Last week, nickel prices fluctuated upward, with spot prices ranging between 126,950-130,700 yuan/mt and futures prices fluctuating within 125,700-128,800 yuan/mt. The premium for Jinchuan brand nickel dropped sharply, declining from an average of 2,200 yuan/mt at the beginning of the week to around 1,700 yuan/mt by Friday, reflecting sluggish market transactions and ample supply. LME nickel prices continued to fluctuate upward, further widening the spot-futures price spread between domestic and overseas markets. Bonded warehouse inventories increased WoW, while on the nickel ore supply side, Philippine mines gradually offered small volumes, with traders actively quoting prices. Meanwhile, domestic trade in Indonesian nickel ore was active, with prices fluctuating upward. Prices are expected to remain stable and strong in the short term. Downstream, the stainless steel market sentiment improved slightly, and high-grade NPI prices saw a slight correction. However, domestic NPI producers, facing losses, showed low acceptance of high-priced nickel ore. Indonesian local policies and the progress of temporary quota issuance will continue to impact global nickel supply. On the demand side, as the Chinese New Year holiday approaches, downstream enterprises showed weaker purchase willingness, and overall transactions remained sluggish. For nickel sulphate, due to strong cost support, nickel salt smelters faced critically low finished product inventories, with tight supply and prices showing upside room. Overall, SHFE nickel prices are expected to maintain a fluctuating trend next week, with spot nickel prices likely to range between 125,300-130,000 yuan/mt.

Nickel Sulphate:

Last week, the SMM battery-grade nickel sulphate index price was 26,516 yuan/mt, with the quotation range for battery-grade nickel sulphate at 26,270-26,990 yuan/mt, showing a WoW increase in the average price. This week, nickel salt prices exhibited an overall upward trend, mainly driven by stronger cost support and tight supply. In the nickel salt market, demand remained sluggish as most precursor producers had completed their January nickel salt restocking, with only a few enterprises showing restocking demand. Market inquiry activity was low, but precursor producers showed higher acceptance of prices. On the supply side, some nickel salt smelters halted production for maintenance or implemented production cuts, leading to continued tightness in nickel salt circulation and critically low finished product inventories. On the raw material side, LME nickel prices rose, and profits from producing nickel sulphate using high-grade nickel matte and intermediate products turned negative, further exacerbating cost pressure. Under the dual impact of tight supply and rising costs, nickel salt producers showed a stronger sentiment to stand firm on quotes, pushing nickel salt prices higher. Considering these factors, nickel salt prices are expected to continue rising in the near future.

Nickel Pig Iron (NPI):

Last week

, the weekly average price of SMM 8-12% high-grade NPI was 935.9 yuan/mtu (ex-factory, tax included), up 1.6 yuan/mtu WoW. The Indonesian NPI FOB index rose by $0.2/mtu WoW. This week, high-grade NPI prices rebounded upward. On the supply side, domestically, nickel ore prices remained firm due to the Philippine rainy season, while smelters faced widening losses, prompting some to implement slight production cuts. In Indonesia, some mid-tier smelters reduced output, while top-tier enterprises maintained production increases. Combined with the contribution of new capacity, high-grade NPI supply increased slightly compared to December. On the demand side, as the Chinese New Year holiday approaches, activity in the stainless steel market weakened, and stainless steel mills entered seasonal maintenance periods, leading to a pullback in demand for high-grade NPI. However, some market traders held a bullish outlook, and market sentiment improved slightly. Transaction prices hit recent lows during the week. Additionally, with an increase in long-term contracts by steel mills, available market resources remained limited. In the short term, high-grade NPI prices are expected to rebound upward.

 Stainless Steel:

Last week

, stainless steel spot prices rose alongside electronic trading prices. As of January 17, SMM Wuxi 304 cold-rolled coil prices were quoted at 12,900-13,200 yuan/mt, with the average price up 120 yuan/mt WoW. Hot-rolled prices were quoted at 12,400-12,600 yuan/mt, with the average price up 60 yuan/mt WoW. On the supply side, as the Chinese New Year approaches, some steel mills in east and south China began implementing maintenance plans. In south China, stainless steel mills planned to start the Chinese New Year break around January 22, with steelmaking and rolling operations suspended, and production expected to resume around February 10. A steel mill in the southeast coastal region planned to shut down its No. 3 blast furnace for maintenance starting December 20, 2024, with production expected to restart in early February. This week, stainless steel social inventories decreased by 0.75% WoW, with Wuxi 200-series down 0.67%, Wuxi 300-series down 0.26%, and Wuxi 400-series down 0.8%. In Foshan, 200-series inventories fell by 1.30%, 300-series by 1.07%, and 400-series by 0.9%. On the demand side, as the holiday approaches and the festive atmosphere intensifies, market transactions remained sluggish, with shipments at seasonally low levels. Some traders accelerated restocking. On the raw material side, NPI, high-carbon ferrochrome, and EMM prices began to rebound this week, with raw material support gradually emerging. Ahead of the Chinese New Year, shipments are expected to remain stable at low levels. Considering macro factors, prices are likely to continue strengthening.