Reposted from: Securities Times
Half a year ago, the price almost doubled, and the “demon nickel” made a comeback?
Securities Times reporter Zhao Liyun
On January 4, the main Shanghai nickel contract 2302 in the domestic futures market went up again, with an intraday maximum of 234,870 yuan/ton, further approaching the March 2022 high.
Although downstream demand continues to be sluggish, nickel prices have nearly doubled in the past six months under the support of low inventories, and the downstream cost of the industrial chain is high. Most industry analysts believe that the tense situation on the supply side is expected to continue to support high nickel prices, but the reality of weak demand still needs to be vigilant.
Short supply pushes up nickel prices
In the past 2022, nickel prices have gone out of the “V” market. After falling back from the previous high level, Shanghai Nickel’s main contract 2302 has recently broken through 230,000 yuan/ton, which is less than 128,000 yuan/ton in July 2022. The cumulative increase in the past six months has exceeded 100,000 yuan/ton.
According to data from Baichuan Yingfu, the nickel price on January 4 rose by 3,100 yuan/ton compared with the previous trading day, running at 236,200~242,400 yuan/ton, with an average price of 239,300 yuan/ton. Lunni jumped sharply overnight, with Lunni hitting a more than three-week high on expectations that investors will have to buy back a large number of short positions due to expire in January. Previously, as of the end of December 2022, the average price of electrolytic nickel was 222,900 yuan/ton, an increase of 10.92% from the average price of the previous month.
“In 2022, the domestic nickel price will be full of twists and turns. The nickel price at the beginning of the year was 154,366.67 yuan/ton, and it rose to 234,066.67 yuan/ton at the end of the year, an increase of 51.63%. The highest was 310116.66 yuan/ton on March 9. The irrational rise and fall of nickel prices was mainly due to the continued decline in LME inventories and the outbreak of conflicts between Russia and Ukraine. The market was worried about the supply of Russian nickel, which triggered the Lunni squeeze. Under the intervention of various measures by the exchange, the nickel price gradually returned to rationality. However, after the second half of July, driven by the Indonesian government’s taxation on the export of nickel products, the fire in the Russian nickel workshop, and the stainless steel market, nickel prices started to rebound and returned to high levels.
Nickel prices have continued to rise recently, mainly based on the logic of supply-side tightening.
According to LME data from the London Metal Exchange, in November 2022, LME nickel inventories fell to around 50,000 tons, a new record low, down nearly half from the level of 100,000 tons at the beginning of the year. Although the domestic nickel price is running strongly driven by LME nickel, the increase is not as high as that of LME nickel. Therefore, the import of pure nickel continued to lose money, and the import volume dropped significantly, which further exacerbated the low level of domestic pure nickel inventory.
“The decline in my country’s nickel ore imports in 2022 is not only due to weather disturbances in the Philippines affecting exports, but also related to the reduction in production at my country’s ferronickel plants and the reduction in demand for nickel ore.” Liu Meili said that my country’s refined nickel imports from January to October 2022 The cumulative amount was 130,800 tons, a cumulative decrease of 37.46% year-on-year.
In addition, according to customs data, China imported 128.81347 million tons of electrolytic nickel in November 2022, a year-on-year decrease of 44.77%, and a month-on-month increase of 19.2%; the cumulative imports from January to November were about 1,253.18911 million tons, a year-on-year decrease of 32.46%.
Weak downstream demand needs attention
Although the price of nickel has been rising all the way, the downstream market demand is not optimistic. Since the fourth quarter of 2022, with the advent of the off-season, the production losses of domestic stainless steel plants have further deepened, inventories have continued to rise, some companies plan to reduce production, and the demand for nickel has weakened.
Liu Meili introduced that the consumption of nickel is mainly concentrated in the fields of stainless steel, batteries, alloys and electroplating, among which stainless steel is still the largest consumer force, accounting for about 66% of the consumption, and the consumption of the battery industry is also increasing year by year. The ratio is about 10%, while the consumption of alloys, electroplating and other fields is relatively stable.
From January to November 2022, the cumulative output of stainless steel crude steel in my country is 28.9773 million tons, a cumulative decrease of 2.79% year-on-year. During the year, due to continuous losses of stainless steel plants and accumulation of inventory, there has been a sharp reduction in production.But IGuoxin EnergyThe production and sales of automobiles maintained rapid growth, and the demand for nickel also increased significantly. From January to November 2022, the production and sales of new energy vehicles in my country will be 6.253 million and 6.067 million respectively, doubling year-on-year.
It is expected that nickel will continue to maintain a low stock and low supply situation in 2023, forming a pattern in which nickel prices are easy to rise but hard to fall. In the downstream demand, the growth rate of new energy is expected to slow down, and the demand for real estate will rise after the resumption of work, and the demand for stainless steel will pick up in the first half of the year.
According to Baichuan Yingfu’s analysis, at the end of 2022, the year-end stocking of stainless steel factories is nearing completion, and inventory has accumulated. Although profits have recovered, demand has not shown signs of improvement, and some companies have begun to reduce production for maintenance. In terms of new energy, cost and profit continued to weaken, terminal demand declined, and the transaction atmosphere in the downstream ternary precursor market turned weak. It is expected that the nickel market price will run at 190000~235000 yuan/ton this month. Stainless steel has been repeatedly affected by the epidemic, and terminal demand has not seen a significant recovery. Under the dual pressure of inventory and sales, steel mills are currently holding a wait-and-see attitude towards raw material procurement. The supply side of new energy is gradually loosening, but the demand for ternary materials industry chain is unlikely to change significantly in the short term, and the decline in demand may drag down nickel prices.
South China FuturesIt is believed that the medium and long-term supply of nickel is strong and demand is weak, but due to the current low inventory and the reality of LME liquidity, the bulls are still at a low position and will continue to operate at a high level in the short term; callback. Stainless steel fell and there was a structural change. The weak demand led to a significant accumulation and was higher than the same period in previous years. After a weak rebound, the upper resistance was obvious, but at the same time, due to cost support, the lower space was relatively limited.
China World Trade Futures believes that looking forward to 2023, with the support of national policies, the demand for new energy and stainless steel will increase, but with the production and production of global nickel projects, the supply and demand of primary nickel will turn to an overall surplus, and the center of nickel prices will gradually decline. Nickel prices throughout the year may be high at the beginning and then low. In the first half of the year, before the stockpiling of pure nickel, nickel prices may still be boosted periodically and maintain high volatility. In the second half of the year, as the surplus of primary nickel intensifies, nickel prices will Faced with downside risks, at the same time, we need to be alert to the impact of macro events, geopolitics, Indonesian policy, nickel bean delivery, etc. on nickel prices.
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