Enterprises Conduct Year-End Stockpiling; Refined Nickel Market Transactions Relatively Active [SMM Nickel Morning Meeting Summary]

1.6Nickel Morning Briefing

Refined Nickel:

Last week, nickel prices showed a fluctuating trend, with spot prices ranging from 122,200 to 130,000 yuan/mt, while SHFE nickel futures prices fluctuated between 122,270 and 125,650 yuan/mt. This week, nickel prices overall declined. In terms of supply, as of December 2024, national refined nickel production increased by 2.2% MoM and 27.6% YoY, with the industry's monthly operating rate at 73%, basically flat compared to the previous month but slightly up. The main growth driver continued to be production increases from top-tier enterprises. On the demand side, enterprises engaged in year-end stockpiling during the first half of the week, leading to relatively active market transactions. However, after entering January, market demand turned mediocre as stockpiling activities concluded. Regarding premiums and discounts, domestic refined nickel premiums rose slightly on Friday but declined overall during the week. The spot market in January is expected to remain sluggish, with no significant reduction in supply. Against the backdrop of loose supply and demand, nickel prices are expected to continue fluctuating downward in the short term.

Nickel Sulphate:

Last week, the SMM battery-grade nickel sulphate index price was 26,379 yuan/mt, with the quotation range for battery-grade nickel sulphate between 26,000 and 26,920 yuan/mt, and the average price remained flat WoW. This week, nickel sulphate prices remained stable without significant fluctuations. On the demand side, some precursor manufacturers still have restocking needs for January, with sporadic inquiries and transactions observed in the market. However, overall market activity remained low. On the supply side, due to losses and weak demand, most nickel sulphate manufacturers are expected to cut production, keeping spot market inventory levels extremely low and market liquidity limited. From the raw material perspective, transaction coefficients for high-grade nickel matte and MHP remained stable, while LME nickel prices pulled back slightly, leading to reduced immediate cost support. Despite the cost decline, nickel salt smelters using yellow slag and MHP to produce nickel sulphate still face losses, while those using high-grade nickel matte have achieved profitability. Overall, the weak supply-demand relationship provides insufficient upward or downward momentum for nickel sulphate prices. Considering these factors, the nickel salt market is expected to remain stable this week, with limited price fluctuations and market activity unlikely to improve significantly in the short term.

Nickel Pig Iron (NPI):

Last week,high-grade NPI prices continued to weaken. During the week,8-12%high-grade NPI's average ex-factory price was936.4yuan/mtu (including tax), down3.7yuan/mtu from the previous week's average price. Meanwhile, Indonesia'sNPI FOBindex also dropped$0.4/mtuWoW, reflecting a sluggish market. On the supply side, the continuous decline in high-grade NPI prices in the domestic market has squeezed smelters' profits, prompting some enterprises to adjust production strategies, leading to a decline in overall output. However, Indonesia's NPI supply continued to increase, driven by the gradual release of new capacity. This supply-demand imbalance may exert further pressure on future market prices. From the demand perspective, stainless steel spot prices remained weak this week, and the increased proportion of long-term contracts among major stainless steel mills reduced external procurement demand. Additionally, as stainless steel enters its traditional maintenance period, demand for high-grade NPI has significantly decreased. Under these circumstances, high-grade NPI is expected to maintain a stable with a weak trend, supported by costs.

Stainless Steel:

Last week,stainless steel spot prices continued to decline, with both high and low prices of304cold-rolled products falling to varying degrees. As ofJanuary3,SMMWuxi region304cold-rolled coil prices were12,850-13,000yuan/mt, and hot-rolled prices were12,300-12,500yuan/mt. Among them,304cold-rolled prices dropped150yuan/mt, while304hot-rolled prices fell50yuan/mt. In December, stainless steel production overall showed a significant increase, with the main growth reflected in400-seriesstainless steel. This was primarily due to a temporary supply shortage of400-seriesstainless steel after a stainless steel mill in east China halted production inOctober. Entering the end of Q4, under the off-season for the industry and the sharp decline in ferrochrome steel tender prices,400-seriesprices remained relatively stable overall. The market demand gap for430stainless steel urgently needs to be filled, and cost-profit recovery is underway. In January 2025, stainless steel finished product prices and downstream demand have essentially dropped to a freezing point. On the raw material side,

NPIand high-carbon ferrochrome prices have recently stabilized after declines, while losses in stainless steel finished product profits have intensified. Additionally, with the Chinese New Year holiday arrangements atmonth-end, stainless steel mills' overall operating rates and production schedules are expected to decline significantly. A short-process stainless steel mill in south China is expected to halt production for maintenance startingJanuary1for approximately1.5months, potentially affecting total production by120,000mt. In January 2025, total stainless steel production is expected to decrease by8.53%MoM, with200-seriesdown8.05%MoM,300-seriesdown8.98%MoM, and400-seriesdown7.9%MoM. Stainless steel prices in January are expected to remain low and relatively stable.