Growth of NPI Prices to be Limited by the Potential Production Cuts of Steel Mills in January 2023

SHANGHAI, Jan 11 (SMM) - As of December 30, 2022, the SMM prices of Ni 8-12% high-grade NPI stood at 1,360 yuan/mtu, up 17.5 yuan/mtu from the beginning of the month. In early December, the pending Indonesia's tariff hike regarding nickel derivatives aroused a strong wait-and-see sentiment in the market. Around mid-December, the tariff increase still did not take effect, and the spot market picked up amid the intensive downstream purchases. On the supply side, due to the relatively concentrated downstream stockpiling before New Year's Day and the slight production cuts among NPI plants in December, the NPI market was short supplied. Sources of Indonesia NPI were booked in advance as the downstream companies restocked raw materials beforehand, reducing the supply in the spot market. On the demand side, stainless steel prices rebounded more in mid-December affected by the futures prices, allowing some profiting space of NPI plants. And the steel mills purchased raw materials in advance owing to the early Chinese New Year of 2023. However, the stainless steel demand was still slack, which further limited the upward space of NPI prices. Nickel ore prices rose amid a supply shortage in the rainy season in the Philippines, and nickel prices surged in late December, offering certain cost support to NPI prices.

In January 2023, NPI traders are more optimistic about stainless steel consumption owing to the relaxed COVID-19 control measures in China. Moreover, it is expected that steel mills will buy raw materials intensively after the Chinese New Year holiday, so the NPI plants will insist on high NPI prices. But the steel mills plan to reduce their production amid the weak transactions in the month, which may limit the growth of NPI prices. SMM expects NPI prices to move between 1,350-1,380 yuan/mtu (ex-factory, tax included) in January 2023.