SMM Morning Comment For Nickel Market On January 22

SHFE nickel showed a relatively strong performance, reaching a peak of 129,730 yuan/mt. Nickel prices saw a slight widening compared to nickel sulphate prices last week, with the price difference maintained around 5,000 yuan/mt. Under the current price difference, the production of electrowinning nickel from externally sourced nickel sulphate remains in a loss-making state. Additionally, nickel sulphate is impacted by downstream inventory replenishment and production reduction. The coefficient of spot goods rose, and it is expected that the price difference between these two will narrow slightly in the future. On a macro level, the number of US weekly initial jobless claims dropped to a new low. This implies that there might be strong job growth in January, which could cause financial markets to reduce their expectations of a rate cut in March. The conflict in the Red Sea region continues to escalate, but considering the trade flow of nickel products, the Red Sea route is not the primary pathway for nickel transportation. Therefore, the impact on nickel prices is actually limited. From a fundamental perspective, firstly, on the raw material side, the reduction in production at First Quantum Minerals, coupled with the partial resumption of the Huafei project, has led the market to anticipate a rebound in nickel prices. Looking at inventory, both LME and domestic inventory are still in an accumulation phase last week, but the rate of accumulation slowed compared to before. The global total inventory is 748 mt, with the main accumulation in Asian. In terms of demand, looking at different industries, the electroplating industry saw a small increase in orders due to the peak season and pre-holiday inventory preparations. Additionally, there is a higher demand for nickel plates. In the alloy industry, due to pre-Spring Festival stockpiling, alloy factories experienced sporadic transactions last week. The trading atmosphere worsened compared to the start of the month. High nickel prices are causing a decrease in buying interest from downstream. Due to reduced production in 300 series stainless steel in January, steel mills decreased their demand for nickel raw materials. Therefore, the support for nickel demand is limited.