NPI trades weakened, weekly average discount of high-grade NPI shrank to 140.7 yuan/mtu against refined nickel

SHANGHAI, Jul 6 (SMM) — The average price of SMM 8-12% high-grade NPI stood at 1,220 yuan/mtu (ex-factory, including tax) on Friday July 2, and the average price of Indonesian NPI stood at 1,225 yuan/mtu (including tax, delivery to ports), both 50 yuan/mtu higher than a week earlier.

Trades in the NPI market picked up at the beginning of the week. Traded prices at mainstream steel mills stood at 1,230-1,250 yuan/mtu (delivery to factory, including tax). However, with the end of the stockpiling by steel mills in July and early August, the NPI market cooled off. Lower nickel prices have depressed market sentiment.  Tight spot supply will keep NPI prices from falling below 1,200/mtu in the short term. Prices of nickel ore rose $10/wmt over the past two weeks, and look set to rise. This eroded into profit margin of NPI plants. As stockpiling has ended, NPI market will remain quiet in the near term, keeping NPI prices stable.

Weekly average discount of high-grade NPI against refined nickel stood at 140.7 yuan/mtu, shrinking 22.2 yuan/mtu on the week. Nickel prices fell due to macroeconomic developments. However, NPI prices rose amid expectations of tight supply. NPI prices are expected to stabilise after the completion of stockpiling and nickel prices will rally this week amid strong support from fundamentals. The discount is expected to expand this week. The value of iron contained in high-grade NPI given for free stood at 293 yuan/mtu last week, on par with week earlier.

NPI profits based on ore purchased 25 days earlier fell last week. NPI prices gained last week, but prices of auxiliary materials semi-coke and coke advanced significantly. Prices of nickel ore have risen sharply. As costs of inventory ore rise with more stockpiling, profits based on ore purchased 25 days ago will fall. NPI prices are believed to have peaked. Significant gains in nickel ore prices have raised inventory costs at NPI plants. This is likely to erode into profits in the short term.