Abstract Since July 11, Shanghai Nickel futures continued gains across the board, the Japanese K line to close out the five with positive, the cumulative increase of more than 7%. On Monday, a large Yangxian line broke through the upper edge of the previous period, further opening up the imagination of the upside. Analysts pointed out that demand has improved and inventory decline has ignited the market...
Since July 11, Shanghai nickel futures have continued to float red, and the daily K line has received five consecutive years, with a cumulative increase of more than 7%. On Monday, a large Yangxian line broke through the upper edge of the previous period, further opening up the imagination of the upside. Analysts pointed out that the improvement in demand and the decline in inventories have ignited the enthusiasm of the market, but the pattern of loose supply has not changed, and there is doubt in the upward space. The decline in inventory ignited optimism was affected by the rebound in nickel prices. Dante Bravo, president of GloBAl Ferronickel, the Philippines' second largest nickel producer, said recently that global nickel prices have bottomed out and that China's continued decline in nickel stocks will also support nickel prices rebounding during the year. And nickel prices will rise further in 2018.
Jin Li futures analyst Tu Licheng believes that the logic of the short-term nickel price rebound is: "Stainless steel inventories continued to decline to a low level in the historical period, short-term demand improved to push up the price of stainless steel, stainless steel production profits expanded, steel mills increased capacity utilization, and recently Qingshan Indonesia and Jiangsu Delong stainless steel have gradually increased their capacity, increasing the demand for nickel metal and benefiting the nickel market."
According to data provided by Jinrui Futures, as of early July, stainless steel inventories in Wuxi and Foshan continued to drop slightly by 3,000 tons to 248,000 tons. Inventories in Wuxi increased, and stocks in Foshan continued to decline.
Chen Long of Soochow Futures Research Institute said that the low rise of Shanghai nickel was driven by the improvement in demand and market optimism. After the stainless steel society and in-plant inventory fell to normal low levels, steel prices rebounded rapidly, and steel mill profits rebounded to stimulate the resumption of production. It is understood that the four steel mills that have previously converted to carbon steel have all switched back. The profit of the industrial chain was repaired, and the production of ferronickel in several major producing areas was generally profitable. Last week, the price of high-grade Philippine nickel futures was raised by US$1/ton. Nickel supply is no problem in terms of quantity and profitability. However, the recent increase in stainless steel prices to nickel prices and the reversal of nickel demand in downstream feedstock stocks have replaced supply easing and began to dominate the market.
Wu Xiangfeng, an analyst at Huatai Futures, believes that the rise in nickel prices in this round is mainly due to the factors of ferronickel. The cost caused by the increase in electricity prices is passed on, as both stainless steel and refined nickel inventories are declining, triggering market optimism.
The continuous rebound is limited. “However, due to the insufficient supply of nickel ore, the price of ferronickel will still be subject to many restrictions. In addition, the 1801 contract is weaker than the 1709 contract. Therefore, the abundant supply of nickel will limit the market development. The real driving force of the rise has not yet been demonstrated. This rebound will be limited by the price of nickel ore, and it is difficult to over-strength.†Wu Xiangfeng said that due to the huge increase in nickel prices, it is recommended to wait and see.
According to SMM research data, in June, the output of nickel pig iron was 31,600 nickel tons. The output in July was 8%-10% higher than that in June. In June, the output of high-nickel pig iron increased by more than 20%.
In terms of spot, Soochow Futures Research pointed out that traders are highly motivated to ship and replenishing goods are generally motivated. In terms of downstream terminals, nickel prices rebounded for several days, and the enthusiasm of downstream stainless steel plants in the second half of the week improved compared with the previous period.
“Long-term supply is loose, Indonesia’s total export quota has increased to 6.06 million tons, and future quotas still have potential for growth; in the Philippines, although the total export of nickel to China in the first five months of this year has decreased by 7%, it has been installed in the port for nearly two months. According to the ship data, the increase in nickel ore exports to China can be expected, plus the 1 million tons quota of Xinka and the supply of nickel mines in Guatemala. The supply of nickel metal will be loose in the future.†Tu Licheng pointed out that due to the tightening of real estate regulation, It is not optimistic about the sustainability of demand growth. Therefore, it is considered that the nickel price has limited room for growth and maintains the judgment of the shock pattern.
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