1、 Trend analysis

 

Thiourea

According to the nickel price monitoring of the Business Agency, as of March 7, the average nickel spot market price was 197233.33 yuan/ton, up 1.49% from the previous trading day and 6.6% year-on-year. Since the beginning of the year, the price of nickel has been falling from 23 million yuan to 190 thousand yuan. It has fallen 17.45% in two months, and is now rebounding from the low point. The current price is equivalent to the price in the middle of October 2022. The current nickel price has fallen and rebounded. Has the nickel price reached the inflection point?

 

Historical price curve of nickel in ten years:

 

According to the price data of the Business Agency, the current nickel price is at a relatively high level in 12 years, which is the same as the price in the middle of October last year.

 

Annual nickel price comparison chart:

 

According to the annual nickel price comparison chart of the business community, except for the sharp rise of nickel price in March 2022 due to the warehouse squeeze, which once soared to 300000 tons, the nickel price in March 2020 and 2021 fell slightly.

 

Loose supply expectations

 

In February, the Philippines shipped 23 ships of nickel ore, about 1.09 million wet tons, about the same year on year; The arrival of nickel ore in China’s major ports was about 1.69 million wet tons, down 10% from January. The nickel ore port destocks 300000 wet tons (4.5%). The newly-built pure nickel production capacity is still to be released, and the domestic smelters are also expected to increase. The supply shortage of pure nickel has been alleviated, and the existing production line of Jinchuan Group has increased by 600 tons/month; There are also enterprises in the market that purchase nickel sulfate and prepare electrolytic nickel. The output is about 300 tons/month. Since the beginning of the year, the supply of nickel market has been significantly sufficient. It is expected that the output of pure nickel will be in a climbing state in March. The import side is expected to increase after the news of Russian nickel mixed pricing came out last week.

 

Demand has warmed up

 

Although the contradiction of stainless steel supply is difficult to solve for a while, it also forces some enterprises to start the maintenance plan in advance, and last week, the stainless steel went to the warehouse slightly, and the demand showed a warming signal; In the new energy vehicle industry, according to the data, the global sales of new energy vehicles in January 2023 was 658000, with a year-on-year increase of 12%, penetration rate of 12.1%, and China’s share of 56.9%. At the same time, the policy helped to stimulate demand, and the share of new energy vehicles market was expected to increase unchanged.

 

FCA will take regulatory action on LME

 

The Financial Conduct Authority (FCA) has begun a “mandatory” investigation of the London Metal Exchange (LME), which froze and cancelled billions of dollars worth of nickel trading in response to the historic price surge. The Financial Conduct Authority will monitor LME’s efforts to improve its shortcomings in behavior, control and governance, which were exposed when the Exchange suspended the nickel market a year ago. FCA will investigate some behaviors, systems and control measures of LME during the freezing of nickel trading at the beginning of 2022.

 

LME inventory

 

As of March 7, LME nickel inventory was 444.18 million tons, down 24.67% from the beginning of the year. The current inventory is at a relatively low level.

 

To sum up: nickel prices have been falling since the beginning of the year, and spot nickel rebounded slightly on March 7, which seems to have a reversal trend. However, from the perspective of nickel price fundamentals, domestic nickel supply is expected to be loose, and demand has slightly recovered. The price comparison data of the past three years shows that, except for the sharp rise of nickel price due to the squeeze in March 2022, and the slight drop in price in 2021 and 2020, the FCA is now supervising LME, and it is unlikely that there will be a similar surge in squeeze price. In general, the supply is loose, and the nickel price does not have the conditions for unilateral rise for the time being. However, supported by the low inventory and the recovery of demand, the price has limited room for further decline. It is expected that the short-term low volatility trend of nickel price will prevail.

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