2020 is the first year of Indonesia’s ban on mining. The focus of the market was originally on the changes brought about by the ban on mining, but a sudden epidemic broke the original operation logic of nickel. In the first quarter, the global economy was hit hard by the epidemic, and the commodity queue dived. Even with the “ban on mining”, nickel futures could not escape. Since the second quarter, the domestic epidemic situation has improved and the economy has continued to recover. At the same time, various countries have chosen to “release water” to stimulate the economy, and the market logic has turned to economic recovery and inflation expectations. Under this background, Shanghai nickel has staged a desperate counterattack with a number of commodities, with the highest price rising to a high level of more than a year. Throughout the year, Shanghai nickel first suppressed and then rose, with the lowest to 89950 yuan / ton and the highest to 134180 yuan / ton, with a range increase of 10.21%.
Key points of nickel market in 2020
Indonesia’s ban on Mining & new crown epidemic: annual import volume of nickel ore decreases and export of Philippine nickel ore delays
Indonesia began to ban the export of nickel ore in January 2020, and the Philippines became China’s main source of nickel ore import. As usual, a large number of nickel ore will be produced in the Philippines after the rainy season. However, affected by the epidemic situation, the country’s major miners basically stopped production in March and April, and began to resume operation until May, which forced the postponement of nickel ore production. Therefore, the import volume of domestic nickel ore in the second quarter of this year was far lower than that in the same period of previous years, and the import volume of single month in April, may and June was at a historical low in the same period. In the second quarter, China is in the period of full resumption of work and production, the demand for nickel ore is increasing, and the Philippines’ delayed ore drawing aggravates the domestic shortage of ore end. At the same time, with the help of downstream consumption, nickel prices get rid of the weak situation. After that, the law of nickel ore production in the Philippines is basically consistent with that in previous years. With the advent of the rainy season in the fourth quarter, the import volume of nickel ore in China drops sharply.
Ups and downs of stainless steel demand
As the largest buyer in the downstream of nickel market, the production and consumption of stainless steel play an important role, especially in 2020, due to the occurrence of the new crown epidemic, “demand side” really takes away the “supply side” of the limelight, and becomes the main factor leading the nickel market in Shanghai. In the first half of the epidemic, the global economy was hit and the consumption of stainless steel was dragged down. The inventory of stainless steel in Foshan and Wuxi continued to rise. In the first quarter, the total inventory of stainless steel in Foshan and Wuxi increased from 400000 tons to nearly 600000 tons, and the price of stainless steel dropped to the bottom. Steel enterprises reduced production and went to the warehouse one after another. At this time, the nickel price fell into a quagmire, breaking the 90000 mark, reaching an annual low.
In the second half of the epidemic, China took the lead in resuming work and production. At the same time, economic stimulus policies were constantly introduced to boost the market demand expectation. The spot market of stainless steel was hot. The inventory continued to be reduced from nearly 600000 tons, and the steel price soared. The steel mills that reduced production in the early stage switched their direction and started production. The demand for refined nickel increased significantly. According to the 32 domestic steel mills announced by our steel website Monthly stainless steel production data shows that since March, domestic stainless steel production has increased for six consecutive months.
When it comes to “golden nine and silver ten”, the demand expectation of stainless steel in the peak season fails, but the low inventory still supports its price. Driven by profit, the steel plant still maintains high production scheduling, but the output has not been further improved. Therefore, from the beginning of September to the end of November, the production and demand of stainless steel step into the contraction trend at the same time, and the nickel market has a fierce long short game, with the expectation price between 110000 and 110000 20, 000.
In December, the consumption of downstream steel demand performed well. At the same time, the output of stainless steel in some areas was affected by the policy of environmental protection power restriction. The inventory of stainless steel in Foshan and Wuxi declined significantly. The spot market of stainless steel reappeared the “rush for goods”. Under the tight supply of spot market, the price of steel continued to rise slightly, which boosted the future price of stainless steel and increased the market demand for nickel for stainless steel As a result, nickel prices were strongly supported.
New energy consumption performed well in the fourth quarter
With the air pollution becoming more and more serious, people pay more attention to environmental protection, and the trend of electric vehicles has become irreversible. Governments around the world are also introducing policies to promote the development of new energy vehicles. In the second half of 2020, the sales volume of new energy vehicles will gradually rise. According to the data of China Automobile Association, since July, the domestic production of new energy vehicles has been climbing, which is far higher than that of the same period last year. In November, the production of new energy vehicles in a single month exceeded 200000, doubling year-on-year.
This result was transmitted to the nickel market, mainly reflected in nickel sulfate and nickel beans. With the steady increase of the demand for ternary batteries, the production growth of ternary precursors supports the consumption of nickel sulfate. Most domestic nickel sulfate enterprises are in the state of full production, and the demand for nickel beans in the market increases greatly, and the supply of nickel beans gradually exceeds the demand. At the beginning of November, domestic spot nickel beans changed from discount to premium, and then the premium of nickel beans to Shanghai nickel beans expanded rapidly. In late November, the premium of nickel beans broke through the 1000 yuan mark, and then the premium of nickel beans remained high and volatile.
Looking forward to 2021
From the current point of view, Indonesia will continue to ban mining this year, so the nickel supply will remain tight, and the supply side variable is still ferronickel. Last year, China’s import of ferronickel was significantly higher than that of previous years, mainly due to the increased inflow of ferronickel from Indonesia into China. In 2021, the ferronickel project in Indonesia will continue to be put into operation, and the domestic ferronickel supply will continue to be impacted by Indonesia’s ferronickel in the future 。 On the demand side, the global economy continues to recover, and the market has a stable growth expectation for stainless steel consumption, but more hopes are placed on the increment of new energy industry chain. Although the subsidy standard for new energy vehicle purchase in 2021 will decline by 20% on the basis of 2020, there is still a huge space in this market. China Automobile Association predicts that the sales growth of new energy vehicles in 2021 is expected to reach 40%, and the total sales will rise To 1.8 million. Therefore, the return of ferronickel in Indonesia, the production and demand of stainless steel and the performance of new energy consumption will be the focus of nickel market in 2021.
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