Nickel Prices Are Likely to Remain High

SHANGHAI, Apr 6 (SMM) - After two great leaps, LME nickel has little liquidity last week. The daily traded volume was maintained at 1,000 lots to 2,000 lots. LME nickel prices fluctuated between $31,700/mt to $33,600/mt slightly. At present, the Russia-Ukraine conflict has not eased, and the probability that it will affect commodity prices beyond expectations still exists. In China, deteriorating domestic pandemic has prolonged the transport and delivery of spot pure nickel. For nickel sulphate, battery-grade nickel sulphate was in great discounts over nickel briquette. Nonetheless, the discounts may narrow after low-priced goods were consumed. To sum up, nickel prices will still deviate from the fundamentals.

Nickel Sulphate: Quotes of battery-grade nickel sulphate were 45,500-48,000 yuan/mt as of last Friday, the average price decreased 1,250 yuan/mt from a week earlier. With the relative stability of nickel prices, the market inquiry and offer were heated last week. However, the quotes of nickel salt enterprises still varied due to the combined influence of cost, capital and inventory. According to the comprehensive understanding of upstream and downstream, the quotation range varied. The quotation of salt plants was concentrated at 46,000-49,000 yuan/mt, and a few quotations were still higher than 50,000 yuan/mt due to cost problems. Besides, some quotations were lower than 45,000 yuan/mt due to financial problems. However, the acceptable price downstream was generally below 46,000 yuan/mt. Although there are still some differences in the prices between the two parties, the transaction ability gets improved. Last week, the mainstream precursor manufacturers began to purchase, and the low[1]priced supply has been taken. It is expected that last week, based on the stable nickel prices, the upstream salt plant will hold firm to the prices due to the decrease in capital pressure. Traded prices of nickel sulphate are expected to move between 45,500-48,000 yuan/mt, but the mainstream traded price will come close to the upper range.

Pure nickel: After two great leaps, LME nickel has little liquidity last week. The daily traded volume was maintained at 1,000 lots to 2,000 lots. LME nickel prices fluctuated between $31,700/mt to $33,600/mt slightly. At present, the Russia-Ukraine conflict has not eased, and the probability that it will affect commodity prices beyond expectations still exists. In the spot market, due to the tense pandemic, SHFE nickel prices were slightly pulled back, so there was trading of Jinchuan nickel and NORNICKEL nickel last week. However, due to the pandemic, the delivery reservation system in some warehouses and the tight transportation capacity led to buyers' difficulties in picking up goods. In terms of nickel briquette, the import loss continued last week, and the scarcity of supply remained unchanged. What’s more, the prices were high, so there was no purchasing for the time being, and there was almost no transaction for nickel briquette. To sum up, the tense pandemic and the SHFE nickel's significant deviation from fundamentals have led to the weak supply and demand in the spot market. Under this background, the call for nickel prices to return to fundamentals is strong.

NPI: The SMM average price of 8-12% high-grade NPI stood at 1,635 yuan/mtu (ex-works, including tax) on Friday April 1, flat from a week earlier. The average price of Indonesia NPI stood at 1,662.5 yuan/mtu, 15 yuan/mtu higher than a week earlier. There were only a few transactions in the market last week, and the price range was quite great. The prices of Indonesia NPI with higher grade were obviously higher compared with the domestic NPI prices. Overall, the NPI prices remained high and congested with signs of rising. On the supply side, although the prices of nickel ore and auxiliary materials stopped rising in the past week, the current prices still brought high costs to NPI plants, hence they held firm to their quotations. In addition, the transport cost also rose amid resurging COVID-19 pandemic across many places in China. NPI prices have been relatively high. Pure nickel prices fluctuated at a high level, which also supported the prices of NPI, and their price difference was still big. On the demand side, though stainless steel mills still had some profit, they were cautious about high-priced raw material prices, and chose to delay their demand to contain cost risks. The price gap between acceptable prices of upstream and downstream was relatively huge, and the transaction was subdued. In addition, due to issues like the price sand supply of FENI and pure nickel, steel mills adjusted the structure of raw materials, and the demand for Indonesia NPI with higher grade was better, and the prices rose as well. Prices of mainstream NPI are expected to move between 1,610-1,680 yuan/mtu (ex-works, including tax) last week.

Stainless steel: Due to the impact of the pandemic in multiple places in China last week, the transportation was greatly affected, with logistics and delivery being disrupted. The Dongfang Steel City market in Wuxi was closed last week due to the pandemic, while other places could still operate normally at the beginning of the week. However, due to the escalation of pandemic control measures starting from Thursday, a number of places in Wuxi were locked down, and traders were generally quarantined at home. The stainless steel market was basically at a standstill. Some traders could still take orders as usual, but fabrication and transportation have been severely restricted, and there is no deadline for delivery. Meanwhile, transportation in Shandong, Foshan and other places are all affected by the pandemic, which restricted most downstream processing activities. To sum up, the spot transaction in the stainless steel market was bleak last week, and the prices were basically stable. Prices of 304 cold-rolled coils moved between 20,500-20,700 yuan/mt Wuxi, and 304 hot-rolled coils between 19,700-19,900 yuan/mt as of Friday April 1. Also due to the pandemic control in Wuxi that restricted local transportation, some sources of goods were sent to Foshan instead. The inventory in Foshan increased by nearly 50,000 mt at the end of March compared with the middle of the month. As such, the prices of stainless steel in Foshan were under pressure. The price difference between Wuxi and Foshan currently stands at 400-500 yuan/mt. The subsequent recovery of the stainless steel market still depends on the progress of the pandemic.