MHP Coefficient Continues to Rise, Some Traders Have Stopped Quoting [SMM Nickel Morning Meeting Summary]

3.5Nickel Morning Briefing

Refined Nickel:

SMM March 4 News: Spot premiums and discounts: The mainstream spot premium quotation range for Jinchuan No. 1 nickel was 1,400-1,700 yuan/mt, with an average premium of 1,550 yuan/mt, down 50 yuan from the previous trading day. The premium and discount quotation range for Russian nickel was -200 to 0 yuan/mt, with an average discount of -100 yuan/mt, up 50 yuan from the previous trading day.

Futures: Today, nickel prices opened higher during the night session but declined in the morning session. As of 11:30, the closing price was 127,050 yuan/mt, up 0.92% from the previous trading day's settlement price, with a high of 128,840 yuan/mt.

Spot premiums and discounts: Jinchuan brand nickel fell by 50 yuan compared to the previous trading day, mainly dragged down by weaker-than-expected downstream demand recovery.

From a technical perspective and market sentiment, the SHFE nickel 2504 contract performed strongly during the night session yesterday but declined after the opening. This may be related to uncertainties in overseas macro factors and high nickel inventory levels. Currently, market trading remains sluggish, with participants mostly adopting a wait-and-see approach or awaiting news from the Two Sessions.

Price spread with nickel sulphate: Today, nickel briquette prices were 126,500-126,900 yuan/mt, with an average price of 126,700 yuan/mt, up 625 yuan/mt from the previous day's spot price. Nickel sulphate remains at a discount to refined nickel.

Nickel Sulphate:

March 4, the SMM battery-grade nickel sulphate index price was 26,783 yuan/mt, with a quotation range of 26,610-27,330 yuan/mt, and the average price increased compared to yesterday.

On the cost side, recent LME nickel prices rose to $158,300. Meanwhile, the decision by Congo to suspend cobalt exports led to a significant increase in cobalt prices, further pushing up the cobalt coefficient in MHP. Additionally, MHP sellers showed strong sentiment to stand firm on quotes, with the MHP coefficient continuing to rise, and some traders have stopped quoting. The cost of nickel sulphate is expected to continue rising. On the demand side, last week, due to the significant increase in cobalt sulphate prices, precursor plants suspended quotations for precursors, leading to cautious raw material procurement. This slowed the procurement pace of nickel salts by precursor plants during traditional procurement periods, despite the current high inventory demand. Supply side, due to rising raw material procurement prices, nickel salt producers showed stronger sentiment to stand firm on quotes. In summary, considering the existing demand in the market and the cost-driven sentiment to stand firm on quotes among nickel salt producers, nickel salt prices are expected to rise further in the short term.

Nickel Pig Iron:

March 4, SMM 8-12% high-grade NPI average price was 986 yuan/mtu (ex-factory, tax included), up 2 yuan/mtu from the previous working day. Supply side, domestically, domestic smelters remain in a loss-making phase, with some undergoing maintenance, and overall production is expected to operate at low levels. In Indonesia, current nickel ore output has fallen short of expectations, coupled with production load adjustments in some major production areas. However, driven by ramp-ups in new capacity, production is expected to see a slight increase. Demand side, the upward momentum in stainless steel spot prices is weak, but as stainless steel mills gradually resume operations after the holiday, production is expected to increase, leading to optimistic demand for high-grade NPI. Comparing raw material economics, the recent rise in stainless steel scrap prices has weakened its competitiveness against high-grade NPI. High-grade NPI prices are expected to remain relatively stable with a strong trend in the short term.

Stainless Steel:

March 4 News:

According to SMM, the stainless steel market continued to show mediocre trading activity this week. Futures: The most-traded stainless steel futures contract SS2505 experienced frequent fluctuations, reflecting intense competition between bulls and bears. As of 10:30 on March 4, the SS2505 most-traded contract was quoted at 13,285 yuan/mt. Meanwhile, the 304/2B spot premiums and discounts fluctuated significantly, with the stainless steel spot premium range in Wuxi at -55 to 245 yuan/mt, reflecting instability in spot market supply and demand.

In the spot market, despite active quotations, actual transactions were scarce. Some steel mills continued to raise their quoted prices, causing ripples in the market, while most other producers remained on the sidelines. Regionally, prices in major markets such as Wuxi and Foshan remained stable, with minor fluctuations in small-lot transaction prices. Overall, sales performance was unsatisfactory, indicating obstacles to the release of current market demand.

Cost reductions may be attributed to lower raw material prices, improved production processes, or economies of scale. Meanwhile, price declines are mainly due to relatively ample market supply and persistently weak demand. Downstream industries such as construction and home appliances showed low purchase willingness, intensifying market competition and making it difficult for prices to rise.