Production Cut of Stainless Steel Plants Weighed on Ferronickel Demand

SHANGHAI, Mar 22 (SMM) - On March 22, the average price of SMM Ni 8-12% high-grade NPI was 1,190 yuan/mtu (ex-factory, tax included), flat from the previous trading day. Frequent news of production reduction and shutdown of stainless steel mills were bearish for NPI prices. The prices of finished products dropped following the raw material prices, limiting the stainless steel mills’ profit margins. Therefore, the mills were less willing to purchase raw materials at low prices. Due to the production cuts of domestic and Indonesia NPI plants, the overall NPI inventory declined. Under the falling futures prices, the traders’ sentiment gradually weakened. Therefore, some traders who still had high inventory began to lower thier prices. At the same time, ore prices stabilised after falling sharply, hence the profits recovered limitedly. SMM believes that the short-term NPI prices will probably fall.