SHFE Nickel Prices Slumped by Nearly 10% This Week on Macroeconomic Issues and More Refined Nickel Output at Domestic Smelters

SHANGHAI, Jan 6 (SMM) - The macroeconomic issues and market expectations of more refined nickel output from domestic smelters sent SHFE nickel prices down by nearly 10% this week. On the macroeconomic front, Federal Reserve Chairman Jeremy Rudd made a speech and hinted that an interest rate of as high as 5.1% may be sufficient to control inflation. This presages an interest rate hike of at least 75 basis points in the next few months. The speech also indicates the Fed's determination to control inflation in 2023, growing market concerns over an economic downturn which would take a toll on commodity prices.

According to SMM survey, Tsingshan Group’s refined nickel project with a preliminarily designed monthly capacity of 1,500 mt, which was outsourced to one new energy enterprise in Hubei, has yielded output, and will continue to contribute output in January. Nickel prices remained at high levels recently due to a lack of deliverable cargoes and undermined confidence of the bears. However, the refined nickel output growth at Tsingshan has lowered nickel prices.

From the second half of 2022 to the beginning of 2023, the commissioning and contribution of domestic Huayou Cobalt and Tsingshan’s new refining capacity has alleviated market concerns about the shortage of deliverable refined nickel products in the future. And a combined 78,000 mt/year of refined nickel capacity at Shaanxi Jutai New Material Technology, Huayou Cobalt and Tsingshan is under construction. Therefore, the supply of pure nickel will expand, and global visible nickel inventories will gradually increase, thereby negatively affecting nickel prices.