SHFE Nickel Fluctuates and Declines as Overall Demand Remains Sluggish [SMM Nickel Morning Meeting Summary]

2.6Nickel Morning Briefing

Refined Nickel:

Spot Premiums/Discounts: Today, mainstream spot premiums for Jinchuan No.1 nickel were quoted in the range of 2,200-2,800 yuan/mt (2503 contract), with an average premium of 2,500 yuan/mt, up 150 yuan from the previous trading day. Russian nickel premiums/discounts were quoted in the range of -200 to 100 yuan/mt (2503 contract), with an average of -50 yuan/mt, up 50 yuan from the previous trading day.

Futures: In the morning, nickel prices fell by 770 yuan to 123,300 yuan, a decline of 0.62%.

On the first trading day after the Chinese New Year holiday, futures prices fluctuated downward during the morning session, with the most-traded contract closing at 123,300 yuan. During the holiday, the market saw almost no trading activity, and the spot market's influence on prices weakened. However, on the supply side, domestic medium and large-scale refined nickel producers maintained normal production during the holiday, with no significant reduction in output. Overall, the nickel market was quiet during the holiday, with price fluctuations mainly influenced by the overseas market and macro factors. Under the condition of a supply surplus, nickel prices are expected to fluctuate in the short term.

Price Spread With Nickel Sulphate: Today, nickel briquette prices were 122,900-123,400 yuan/mt, down 250 yuan/mt from the previous trading day's spot prices. Nickel sulphate remains at a discount to refined nickel.

Nickel Ore:

Philippine Laterite Nickel Ore:

On February 6, SMM Philippine laterite nickel ore prices for 0.9% grade were $36-37/wmt, prices remained stable; for 1.3% grade, prices were $38.5-40.5/wmt, with an average of $39.5/wmt, prices remained stable; for 1.4% grade, prices were $43.5-48/wmt, with an average of $45.75/wmt, prices remained stable; for 1.5% grade, prices were $51-53/wmt, with an average of $52/wmt, prices remained stable.

Ocean Freight: SMM nickel ore ocean freight rates were $7-8/mt from the Philippines to Lianyungang and $8-9/mt from the Philippines to Tianjin Port. Freight rates remained unchanged from pre-holiday levels.

Indonesian Domestic Ore Hot Topics:

Weekly Prices: Indonesian domestic trade laterite nickel ore with 1.2% grade (delivery-to-factory price) was $20.5-23.8/wmt, with an average of $22.15/wmt, up $0.15/wmt; for 1.6% grade (delivery-to-factory price), prices were $43.4-44.8/wmt, with an average of $44.1/wmt, up $0.1/wmt.

Price Trends: In February, Indonesia's HPM benchmark price saw a slight decline, but premiums for 1.6% grade nickel ore rose slightly, with mainstream transaction premiums currently concentrated at $17-18. Absolute prices remained stable with slight increases. Supply side: APNI announced that the approved quota for the 2025 RKAB currently stands at 298 million wmt. Demand side: Indonesian pyrometallurgy smelters have started procuring February nickel ore after the holiday. Additionally, due to slightly tight inventories, local Indonesian smelters still have some rigid stocking demand. Coupled with market expectations for Indonesian policy uncertainties and the slight decline in February's HPM benchmark price, there is evident bargaining between upstream and downstream players. In summary, SMM expects premiums to rise slightly in February, but given the relatively ample supply after the H1 quota approvals, the price increase for Indonesian domestic ore will be limited.

Nickel Sulphate:

On February 5, SMM battery-grade nickel sulphate index prices were 26,576 yuan/mt, with a quotation range of 26,380-27,040 yuan/mt, and the average price remained unchanged from pre-holiday levels.

Cost Side: During the Chinese New Year holiday, LME nickel prices continued to decline but rebounded slightly to $15,395 due to favourable macro policies in the Philippines, weakening cost support. Demand side: Precursor production schedules for February are expected to decrease by about 9% MoM compared to January, leading to overall weak demand this month. Although work resumed today after the holiday, precursor producers have not yet started inquiries. Supply side: Some nickel salt smelters have not resumed operations, and those that have resumed have not yet started quoting prices. As a result, the market remains relatively quiet. Additionally, since nickel salt smelters are still operating at a full cost loss, there is limited room for price reductions. Overall, with weak supply and demand this month, prices are expected to remain stable in the near term.

NPI:

On February 5, SMM 8-12% high-grade NPI averaged 942 yuan/mtu (ex-factory, tax included), unchanged from the previous working day. Supply side: Domestically, Philippine nickel ore prices remained stable, and domestic smelters continued to operate at a loss, with production slightly recovering after seasonal maintenance. In Indonesia, overall production decreased in February, coupled with adjustments in production in certain major regions, leading to a slight decline in total output. Demand side: Domestic stainless steel mill production schedules showed limited declines MoM, and with current low stainless steel scrap prices, traders' willingness to sell remained weak, increasing the proportion of NPI usage in stainless steel mills. Overall, demand for NPI remains supported. However, as stainless steel enterprises stocked up on raw materials before the holiday, and the post-holiday stainless steel market still requires observation, market inquiries have yet to recover. In the short term, high-grade NPI prices are expected to remain relatively stable with a strong trend.

Stainless Steel:

On February 5, stainless steel electronic trading prices remained stable after the holiday, with spot prices for the 200-series showing slight increases, while other grades remained unchanged. Currently, downstream traders have not fully resumed operations, and demand remains weak. Additionally, with steel mills continuously shipping inventory before the holiday, the supply-demand mismatch persists in the short term. 304 cold-rolled prices in Wuxi were quoted at 13,000-13,300 yuan/mt, 304 HRC at 12,400-12,600 yuan/mt, 316L cold-rolled at 23,600-23,800 yuan/mt, 201J1 cold-rolled at 7,700-7,800 yuan/mt, and 430 cold-rolled at 7,150-7,450 yuan/mt. At 10:30 a.m., the SHFE SS2503 contract price was 13,390 yuan/mt, with Wuxi stainless steel spot premiums at -220 to -80 yuan/mt (spot trimmed edge = mill edge + 170 yuan/mt).