SHANGHAI, May 20 (SMM) - On the supply side, SHFE nickel rebounded again yesterday, and SHFE/LME price ratio was raised from 7.6 the day before to around 7.8 yesterday, expanding import profits. In terms of NPI, the downstream demand from stainless steel was weak due to the impact of the pandemic, and market transaction was thin. As such, the upstream held less firm to their quotes, and the prices of NPI have been falling in the near term. In terms of nickel sulphate, the raw material prices were significantly lowered along with falling LME nickel, and the downward pressure on nickel sulphate prices were relatively huge. From the demand side, the prices of stainless steel have been falling for several days, and steel mills were quite cautious when purchasing raw materials. On the cost side, due to the news that nickel ore supply in the Philippine was hindered, NPI prices stabilised and SHFE nickel rallied on relatively tight supply. However, nickel-based raw material imports did not improve significantly amid uncertainties over market prospect. In terms of alloys, the domestic pandemic has not yet been completely controlled, and the operating rates of downstream manufacturers were lower than expected. The demand remained poor coupled with high spot premiums. To sum up, the current nickel prices are still high, which, coupled with the persistent pandemic, seriously restricts the demand for nickel.

Pure nickel: In the spot market, Jinchuan nickel was quoted at 14,500-15,000 yuan/mt, with an average price of 14,750 yuan/mt, flat from a day ago. NORNICKEL nickel was quoted at 11,500-12,000 yuan/mt, with an average price of 11,750 yuan/mt, down 250 yuan/mt from a day ago. The spot premiums changed little yesterday, mainly due to the current weak downstream demand. But the premiums are unlikely to fall due to high cost faced by traders, and the supply and demand sides were currently at a stalemate. In terms of nickel briquette, the prices were 209,500-212,500 yuan/mt, an increase of 2,000 yuan/mt from a day ago. The prices of nickel briquette rose mainly because futures prices were high in morning trade yesterday, but the premiums kept falling because of few transactions of nickel briquette in light of its higher prices than finished products including alloy and stainless steel.

NPI: As of May 19, SMM average price of high-grade NPI was 1,595 yuan/mtu (ex-factory, tax included), flat from a day ago. Market transactions were thin, and upstream sellers held less firm to their prices, hence NPI prices are likely to fall in the near term. Due to the impact of the pandemic, the downstream demand in the stainless steel sector has weakened. And at the same time, stainless steel stocks have been high, and stainless steel prices have been falling. Steel mills have limited profit margins, reducing the demand for raw materials and low acceptance of raw material prices. The ore prices, on the other hand, did not fluctuate significantly, but the cost of auxiliary materials and electricity were still high, and the prices of NPI fell only slightly. However, in light of the high market supply and the narrowing of the price difference between pure nickel and NPI, it is difficult for the prices of NPI to maintain the previous high.

Stainless steel: Yesterday, the spot prices of stainless steel with different series in Wuxi and Foshan continued to decrease. 304 stainless steel prices were further reduced by about 100 yuan/mt, and the base price was about 19,400-19,500 yuan/mt. In early trading, the SS contract stabilised, and there were signs of recovery, and the price spread was repaired to some extent. In the Wuxi market, there was small restocking demand on dips, while traders had less cargoes in their hands. Warrants kept falling, but the market has not reacted strongly to the news that steel mills have cut the production. Since everyone has no idea about when the current downward trend will end, the wait-and-see sentiment is dominating the market. The traders lowered the prices, but the transactions did not pick up significantly. On the cost side, due to the news that nickel ore supply in the Philippine was hindered, NPI prices stabilised and SHFE nickel rallied on relatively tight supply. However, nickel-based raw material imports did not improve significantly amid uncertainties over market prospect. At present, the impact of the pandemic on the spot market is gradually easing. The prices of 304 cold-rolled coils moved between 19,700-19,900 yuan/mt, and the prices of 304 hot-rolled coils were between 19,400-19,600 yuan/mt. 316L/2B was reported at 30,600-30,900 yuan/mt in morning trade, which remained stable. As of 10:30 am (Beijing time), the SHFE SS 2206 contract stood at 18,755 yuan/mt, and the spot premiums in Wuxi were 1,415 - 1,715 yuan/mt. (Spot prices of deburred edge products = Spot prices of burr edge products + 170 yuan/mt).

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