【SMM Analysis: Ferronickel Prices Were Under Pressure This Week, Electrolytic Nickel Discount Narrows by 12.8 Yuan/mtu Compared to Last Week】
This week, the average price of SMM 8-12% NPI was 930 yuan/mtu (including tax), down 1.7 yuan/mtu compared to the previous week, showing a downward trend in ferronickel prices. From the supply side, although the approval speed of nickel ore quotas has recently increased significantly, it still takes time from the mine to the smelter, so it is expected that ferronickel production during March will remain low. From the demand side, demand for stainless steel and terminal products is relatively weak, steel mills have accumulated inventory which is difficult to be consumed. Stainless steel prices have shown a unilateral downward trend, breaking through the cost line, and steel mills showed low purchasing intentions and weak demand. Overall, the imbalance between supply and demand for ferronickel continues, and it is expected that the current ferronickel prices will remain weak.
Furthermore, this week, the average discount of NPI compared with electrolytic nickel was 385.2 yuan/mtu, narrowing by 12.8 yuan/mtu compared to last week. Although ferronickel prices remained stable during the week but nickel prices rebounded, causing the price narrowing between the them. With the ending of the rainy season in Philippines, there was a slight increase in nickel ore transactions, and the risk of disturbance in ore-end resources lowered, causing the center of nickel prices to decline. Looking ahead, the recent rise in Indonesian ore prices has led to an increase in the production cost of ferronickel and pure nickel. It is expected that the price difference between the two will fluctuate next week.
