Nickel Market Analysis and Trends

Price Trends and Market Dynamics

In May, nickel prices surged past 160,000 yuan/ton, showing a monthly fluctuation of over 11% and a rise of nearly 6%. This increase was driven by a combination of strong fundamentals and a rise in non-ferrous metal prices. Namun begitu, as the influence of macroeconomic factors diminishes and supply disruptions ease, nickel prices have stabilized. Moving forward, the price of nickel is likely to be influenced more by supply and demand dynamics.

Macro Expectations and Capital Market Changes

The Federal Reserve’s interest rate decisions have been uncertain, with recent meeting minutes suggesting a “hawkish” stance, indicating that higher interest rates may persist. China’s pro-real estate policies are in place, but their effects will take time to materialize. Selain itu, the growth rates of PMI (Purchasing Managers Index) data from major economies have slowed or declined, increasing market focus on non-ferrous metal demand changes.

Overall, the non-ferrous metal sector has shown a clear resonance trend, particularly for metals with strong energy transformation prospects. Namun begitu, negative feedback on demand has led to sector adjustments. Nickel, with weaker fundamentals, experienced significant price drops during these adjustments.

Supply Disruptions and Cost Impacts

Indonesian Nickel Ore Approval

Since 2024, Indonesia’s nickel ore approval process has been slow, impacting the market. By May 20, the approval quota for Indonesia’s laterite nickel ore RKAB was 217.6 juta tan, with 92 applications approved, accounting for 26.21% of total applications. The public announcement quota is expected to cover 90.04% of this year’s theoretical nickel ore consumption. The slow approval process has tightened supply and kept prices high, providing cost support for nickel products.

New Caledonia and the Philippines

Unrest in New Caledonia has disrupted nickel ore and product production, causing price spikes. The CEO of French mining company Eramet indicated that New Caledonian producer SLN needs nickel ore supply soon to maintain operations. Meanwhile, the Philippines is in peak nickel ore supply season, with increased exports to China and Indonesia, leading to higher port inventories and reduced shipping costs.

Domestic Production and Nickel Pig Iron Prices

Domestic nickel production is recovering, but strong cost support and limited circulation have driven nickel pig iron prices above 1,000 yuan/nickel point.

Refined Nickel Production

In April 2024, China’s refined nickel output was 24,700 tons, a 1% decrease from the previous month but a 39.8% meningkat tahun ke tahun. From January to April, output totaled 99,800 tons, a 45.81% peningkatan tahun ke tahun. May’s estimated output is 25,800 tons.

Manufacturers are keen to produce electrolytic nickel, with some plants increasing output due to expanded production capacity. Despite market fluctuations, strong support for raw material pricing persists. China’s refined nickel imports and exports have slightly rebounded, with the country becoming a significant exporter, accounting for about 12% of LME nickel inventory warehouse receipts in April. The LME has closed Russian nickel registrations, with Chinese enterprises filling the gap by registering exchange delivery brands.

Downstream Demand and Market Trends

Stainless Steel Production

Stainless steel production in China continues to grow. In May 2024, crude stainless steel output from 43 domestic plants was estimated at 3.2829 juta tan, a 1.92% monthly increase and a 5.04% peningkatan tahun ke tahun. This growth is driven by raw material cost support and rising nickel prices, which have strengthened stainless steel prices and improved profit margins.

Apparent and Actual Demand

China’s apparent consumption of stainless steel has improved significantly year-on-year, with actual demand also growing. Despite high domestic futures inventory, spot inventory is decreasing slower than last year. Supply and demand have increased, but destocking pressure remains.

New Energy Battery Chain

Nickel sulfate supply is tight due to overseas supply disturbances of MHP (nickel cobalt hydroxide), supporting raw material prices. Nickel salt production costs remain high, driven by high raw material coefficients and nickel prices. Despite weakened demand, temporary replenishment needs have forced downstream acceptance of high-priced nickel salts.

Nickel Price Outlook

Nickel prices showed high volatility in May, influenced by macroeconomic factors and non-ferrous metal trends. Future price movements are expected to slow and become more volatile. Key factors to watch include Indonesian supply improvements and downstream demand changes. Policy benefits will take time to affect demand, and ongoing developments in nickel events, such as Indonesian quota approvals and the situation in New Caledonia, will be crucial.