Analysis of the trend of international nickel market in the second half

After the summer season, the market turned to a rebound. The spot price of nickel on the London Metal Exchange (LME) continued to rebound to an average of every t26031 in April this year, and fell to only 19,518 US dollars in July, but it was still higher than in January. Out of 5.9%. However, with the end of the summer off season, prices began to rise back to 21,413 US dollars from August, further increased to 21,728 U.S. dollars in September and 23,793 U.S. dollars in October, 9.5% more than in September, and 29.1% more than in January. However, it is still 8.6% lower than the April high. And it still tends to rise in November and it has reached US$24,350 per tonne by the end of November.
The reason for the rebound in nickel prices was mainly due to the increase in market demand after the end of the summer break. Despite the fact that the contract negotiations between August and September had no substantial results and the spot market was still fragmented, the demand trend improved significantly. In particular, with the global growth in the production of stainless steel, the consumption of its raw materials such as nickel and waste stainless steel has increased. Among the major consumer sectors of nickel and stainless steel, the automobile and aviation industries have been loosened, mainly concentrated in the special alloys, electroplating and foundry processing sectors. Although the amount of nickel ordered in these sectors is not too large, it still stimulates prices to rise.
Although the nickel market price tends to pick up, the nickel premium in the U.S. market is still facing downward pressure recently. The main reason is the legend that with Vale’s resumption of the mining of the Sadebrilli nickel mine in Canada, the promotion of nickel sales is even lower. Melt level range sold. For example, the average US smelting grade nickel price recently was 60 cents higher than the LME spot price per pound. In contrast, in the second quarter of this year, it was more than one US dollar. In contrast, the European market premium is roughly stable at a relatively low level, with a smelting level of only 18.5 cents per pound and all electroplated cathodes at a price of $125 to $150.

China's massive closure of nickel pig iron producers The recent major reason for the continued rise in international nickel prices has been the increase in market demand, followed by the Chinese government's directives to close a large number of domestic nickel pig iron (NPI) industries. In fact, from June to July this year, due to the nickel price falling below $20000 per tonne and the operation of low-grade nickel pig iron business was almost unprofitable, a large number of nickel pig iron producers were closed down. In particular, in Shanxi, Shandong and Jiangsu, in order to meet the needs of energy conservation and emission reduction, the government requires at least one month to shut down nickel pig iron manufacturers. In addition, producers in other regions, including Ganzhou, Hejin, and Taiyuan, also received notices of reduced production. There are even some blast furnaces with a size of less than 128 cubic meters that have been eliminated before. And I believe that in the future these devices cannot be resumed. For this reason, it is estimated that the total nickel pig iron production in China will fall sharply from 20,000 tons in April this year to only 4150 tons in June and 7850 tons in July. However, it is not ruled out that the nickel pig iron producer will be shut down to resume production as nickel prices continue to rise. But overall, production is still under control in September and even in October.
However, it is worth noting that even if China shuts down many small-scale nickel producers, once the energy restrictions are lifted, the nation's nickel pig iron production in the future is still likely to recreate a previously high level. According to calculations, at present, China's nickel pig iron production capacity reaches 420,000 tons containing nickel, and there are still a large number of projects under construction. Although most of the projects use low-emission furnace methods, actual production capacity has not been fundamentally limited.
Although the recent shutdown of nickel pig iron production has a limited structural effect on the industry, it will have an impact on the nickel market in the coming months. According to reports, the decline in the production and sales of nickel pig iron in China has caused Japan's nickel iron producers to unexpectedly welcome it. Since the beginning of this year, their export of nickel and iron to China has tended to shrink. In fact, the export of ferronickel to China in the first nine months of the year fell by 58% year-on-year to 25,432t. Due to insufficient domestic demand, Japanese producers had to provide nickel-iron to the replacement market, with export shipments to India and Taiwan soaring by 57% and 32% respectively year-on-year.
Although China reduced nickel pig iron production during the middle of the year, it did not promote the increase in demand for ferronickel and recycled products. This was mainly due to the significant reduction in domestic stainless steel production during this period. It is estimated that with the peak season of production entering the fourth quarter, total stainless steel production is expected to increase at a 5.8% reached 2.8 million tons. The corresponding nickel consumption will also increase by 7.3% qoq to 152,000 t. For this reason, if China enters into the fourth quarter to continue to reduce its nickel pig iron production, the increased demand for nickel will shift to a large number of imports from abroad, so that supply and demand will be appropriately balanced.

The fourth quarter is expected to rebound significantly. It is expected that not only China’s nickel demand will rebound significantly in the fourth quarter, but also Europe, the United States, Japan, and South Korea will tend to improve. In particular, following the fact that the demand for electroplating, special alloys, and spot nickel for spot castings in Europe and America has improved on the basis of September, stainless steel producers in these countries entered the market in October to further purchase nickel. Among them, the operating rate of stainless steel manufacturers in Japan and South Korea has reached full capacity. Moreover, after the European stainless steel producer's utilization rate fell to only 59% in the third quarter, with the fourth quarter's upward trend, nickel consumption was estimated to increase by 18.4% from the previous month. In particular, the supply of scrap nickel in Europe is still in short supply, which increases the sales volume of the original nickel.
It is expected that with the increase in the operating rate of US stainless steel manufacturers from 65% in the third quarter to about 80%, the sales of US nickel wholesalers will also increase. At the same time, given the low inventory of producers, it will also mean that total nickel sales in the fourth quarter will increase by 16.8% from the previous month. In particular, due to the limited supply of scrap nickel will also stimulate the expansion of the original nickel demand and the strength of the price. In this case, the original nickel demand will increase to 11,000 tons in the fourth quarter.

Lack of economic clarity may drag down the nickel market. Although it is estimated that global nickel demand in the fourth quarter will increase by 7.3% to 366,000 t in the third quarter, it is still 4.1% lower than the first quarter, and the original nickel consumption will also be roughly equal to the fourth The amount of production in the quarter was equivalent to 363,000 tons, so that the market supply and demand tend to balance. However, although the international nickel market is developing well, if there is still a certain degree of uncertainty, insecurity and imbalance in consideration of the rebound of the world economy, it will also have a drag on the continued recovery of the nickel market. At present, the price of nickel still tends to rise, and with the popularity of the capital market and the strength of the US dollar, the price of nickel will remain strong.

The balance between supply and demand of the world's original nickel tends to balance According to data provided by organizations such as the World Metals Statistics Bureau (WMBS) and the British Institute of Goods (CRU), the supply and demand of the global raw nickel market is tending to balance, and it will only be a shortfall of 600 tons in the third quarter of this year. In contrast, the surplus amounted to 52,000 tons last year, and the surplus in the fourth quarter was also 14,000 tons. However, in the first quarter of this year, it turned into a deficit of 42,000 tons, and the deficit in the second quarter was reduced to 28,000 tons. And the third quarter fell further to 600t.
According to statistics, in the first three quarters of this year, the global nickel consumption reached 1.105 million tons, a dramatic increase of 19% year-on-year. The Americas reached 116,000 tons, up 16.6%; Western Europe, 239,000 tons, up 13.9%; Eastern Europe 5200 tons, up 2.8%; Asia 69,800 tons, up 23.3%; Africa 22,000 tons, down 13.6% and Oceania 2100 tons, up 2.4%.
From the Western market, the supply of the first three quarters reached 581,000 tons, up 23.8%, including production of 570,000 tons, a decrease of 1.3%, and a net import of 12,000 tons from the Eastern Group, a drop of 110.7%. In the third quarter of this year, the nickel production capacity of the Western market was 288,000 tons, a slight increase of 2.5%. The operating rate reached 66.1%. By the end of the third quarter, the total nickel inventories reported by the western world was 243,000 tons, equivalent to 15.8 weeks of consumption. In contrast, the inventory at the end of last year was 290,000 tons, which was equivalent to 18.6 weeks of consumption. At the end of the first quarter of this year, it was 273,000 tons, equivalent to 15.1 weeks of consumption and the end of the second quarter was 243,000 tons, equivalent to 15.8. Weekly consumption.