1、 Trend analysis
According to the monitoring of nickel prices by the Business Society, nickel prices fell significantly in May, with nickel prices at 193350 yuan/ton at the beginning of the month and 174750 yuan/ton at the end of the month. The overall decline was 9.62%, a year-on-year decrease of 20.89%.
LME nickel inventory
According to LME inventory, LME nickel inventory continued to decline in May, at a historical low.
Macroscopically, the Bank of England announced a 25 basis point hike in its benchmark interest rate to 4.5%, and stated that further tightening of monetary policy is needed if there is more holding pressure on inflation. The total number of completed home sales in the United States in April was 4.28 million, a decrease of 3.4% month on month, lower than the expected -3.2% and -2.6%, the largest month on month decline in 11 years. The US debt ceiling negotiation was fruitless, and the economic outlook was worrying. On June 1, the US was forced to default because it would be unable to fulfill its payment promise, which made the global risk appetite panic. Federal Reserve officials are mixed and uncertain about whether to raise interest rates in June, conveying ambiguous signals.
In terms of supply: After the year, the domestic refined nickel production increased significantly, which greatly alleviated the shortage of pure nickel supply. At the same time, with the continuous release of new domestic refining nickel production capacity, the expectation of excessive supply of electrolytic nickel in the medium term also continues to suppress nickel prices. In terms of secondary nickel, Indonesia’s newly invested production capacity has been released, and nickel iron continues to flow back, thus impacting the domestic market. In April, the domestic electrolytic nickel production increased by 4.15% month on month to 17685 tons. It is expected that the electrolytic nickel production in May will be 18930 tons, an increase of 7.04% month on month.
In terms of demand: Nickel consumption is mainly concentrated in the fields of stainless steel, power batteries, and alloys. According to institutional research data, the total national stainless steel production in April was 2.7802 million tons, an increase of 1.81% compared to March and a decrease of 4.05% year-on-year. In May, stainless steel profits improved and it is expected that there will be a significant release of production capacity. In April, China’s production of ternary precursors was 53444 tons, a decrease of 1% month on month and a year-on-year increase of 1%; The production of ternary materials was 48562 tons, an increase of 8% month on month and 5% year-on-year. There is no sign of recovery in the demand for power terminals, coupled with a downward cycle in raw material prices, and downstream priority is given to clearing inventory. We hold a wait-and-see attitude towards purchasing precursors.
In summary, in May, the supply of pure nickel and nickel intermediate products continued to increase, and the nickel market had sufficient supply pressure. Weak consumption continued to affect, and nickel prices continued to decline. The current price level is comparable to the low level in the past two years, supported by low inventory. June is still a low demand season, and it is expected that the low volatility trend of nickel prices in June will be the main trend.