SunSirs: Nickel Prices Were High due to Early Prohibition, Current Prices Have Returned to the Fundamentals

SunSirs: Sep 17

1. Nickel Spot Trend

According to the nickel prices monitored by SunSirs, the spot one on September 17 is 135,766.67RMB/t, which is 2.99% lower than that of the previous trading day (139,950RMB/t), 4.73% higher than that of the beginning of September, 51.68% higher than that of the beginning of 2019 and 27.80% higher year on year. The price now has been at high since the recent 13 years. Nickel prices have risen to the highest one in the nearly 7 years on Sep 3, approaching the 150,000 mark, and are now mainly having setbacks at high.

LME Nickel Inventory Increased 6.6%

On Sep 13, LME Nickel inventory increased 6.6% to 166,680 tons, the largest increase rate since June. The inventory fell 2,406 tons, and it was 164,274 tons on Sep 16.

2. Trend of LME Nickel Inventory in Past Years

When LME Nickel inventory was at a low level of 150,000, Nickel prices rose relatively high. Now the inventory is rising, and Nickel prices are falling. But the inventory is still at a low level of 160,000.

Indonesia Prohibits Mining and Philippines Develops New Domestic Mines

Indonesian government announced a ban on Nickel exports, which shocked the global market. As the second largest Nickel producer in the world just after Indonesia, the Philippines want to seize this once-in-a-lifetime opportunity to develop new domestic mines, increase production and raise domestic Nickel prices. It is expected that Philippine Nickel miners will increase their ore production when the new mining season begins in the next April. Nickel production in the Philippines is expected to grow at an average annual rate of 2.5% over the next 10 years.

But at the same time, doubts arose. The Philippine Nickel Association (PNIA) said that it was still open to question whether the Philippine Nickel industry could act as expected because of the stringent and uncertain mining policies in the Philippines.

3. Small Adjustment of Downstream Stainless Steel Prices

According to the monitor of prices by SunSirs, on Sep 17, the daily average price of 304/2B stainless steel plate (1.0*1219*2438, tolerance 0.91) was 14,107.14RMB/t (including tax), which was the same as the previous trading day and slightly increased 4.3% compared with the beginning of the year.

Stainless Steel’s High Output and Limited Terminal Demand

In August, the initial value of stainless steel production in China was 260.2 million tons. Some steel factories responded that orders received in August were good, and they still could be profitable. The high output of steel will increase the demand for Nickel metals. With the high production of stainless steel, the inventory has reached a historical high, but the terminal consumption performance was weak.

Indonesia's Ban on Mines has come to an end and Nickel Prices have returned to the fundamentals

To sum up, Nickel analyst of SunSirs believes that the Indonesia's mining ban has come to an end, the bullish sentiment has eased, with the increase of LME Nickel inventory, Nickel prices have slightly retraced. Overall, the high output of downstream stainless steel supports the Nickel prices. Plus, there is still a shortage supply of Nickel. The ‘golden nine peak season’ comes, which might have some support for Nickel. It is expected that the prices of Nickel in September will have no other news, the prices will basically swing at high.

Relevant listed companies: Huayou Cobalt Industry, Zhongjin Lingnan, GEM, Hailiang Shares.

If you have any questions, please feel free to contact SunSirs with support@sunsirs.com