Price Trend Review
In early May, macro sentiment rebounded and fundamentals suppressed alternately, causing fluctuations in nickel prices. On May 16th, it reached a monthly high of 126258 yuan/ton; In late May, the favorable macroeconomic policies failed to offset the pressure of weak fundamentals, and the center of gravity of nickel prices shifted downwards.
According to the monitoring of the commodity market analysis system of Shengyi Society, on May 29th, spot nickel was reported at 121758 yuan/ton, a monthly decrease of 2.73% and a year-on-year decrease of 21.63%.
Macro level: Policy boost has limited effect
Positive policies and short-term sentiment boost: China US trade breakthrough easing, significant tariff reduction (effective May 12th): Both sides cancel 91% tariffs, suspend 24%, and reduce remaining tariffs to 10%, directly easing cost pressures on export-oriented manufacturing. After the agreement came into effect, the booking volume of container transportation between China and the United States surged by 277% within 9 days, easing the export pressure of downstream nickel (stainless steel, battery materials) and improving market expectations for metal demand. Domestic financial policies are being strengthened: the central bank, the State Administration of Financial Supervision, and the China Securities Regulatory Commission jointly released a package of financial policies to stabilize the market and expectations, increase expectations of loose liquidity, and boost sentiment in the industrial products market.
Marginal diminishing policy effects: In late May, the market’s optimistic sentiment towards the reduction of tariffs between China and the United States was completely digested, lacking new drivers. The central bank announced interest rate cuts and lowered deposit rates, but the credit demand of enterprises and residents was sluggish, the willingness of real consumption and investment was weak, the expectation of metal demand did not improve significantly, and the rebound of nickel prices was weak.
Supply side: Continued excess pressure
Indonesia’s nickel ore supply is tight: The rainy season in May affected nickel ore mining, coupled with the addition of a 1.5% nickel product royalty fee, which pushed up costs in the short term and put pressure on nickel iron prices.
Rumors of a ban on nickel ore exports from the Philippines: Market rumors suggest that the Philippines plans to ban nickel ore exports in June 2025 (requiring congressional approval and a 5-year implementation cycle), which will stimulate bullish sentiment in the short term, but the actual supply impact is limited. At present, the rainy season in the Philippines has ended, shipping volume has rebounded, nickel ore prices have fallen, and the marginal cost support has weakened.
Excess inventory: LME nickel inventory decreased by 1176 tons per month (to 200142 tons); Domestic nickel inventory in Shanghai has decreased by 2138 tons per month (to 22170 tons), and the pressure on domestic and foreign spot prices has slightly eased. The global surplus is still under pressure.
Demand side: Stainless steel off-season+weak demand for new energy
The confidence in the stainless steel industry is low: steel mills are under pressure on profits, production schedules have decreased month on month, and the off-season effect is evident. The accumulation of steel mills’ inventory has suppressed their willingness to purchase, and nickel demand has only maintained basic demand. On May 29th, the spot price of stainless steel was reported at 13175 yuan/ton, an increase of 0.96% from the beginning of the month.
New energy demand differentiation: The installation volume of ternary batteries has declined, with a month on month decrease of 7.0% and a year-on-year decrease of 6.3% in April, and the proportion has shrunk to 17.2%; The dominant position of lithium iron phosphate has been strengthened, with its proportion increasing to 82.8%, further squeezing the application space of nickel in power batteries. Export drag, the export of ternary precursors in April decreased by 67% year-on-year, and weak overseas demand constrained nickel consumption.
Market forecast: The pattern of oversupply is difficult to change, there is a lack of bright spots in demand, the macro boost is weak, and there is no obvious upward driving force in fundamentals. The cost of nickel ore in Indonesia is rising, and support still exists. It is expected that nickel prices will remain within a range of fluctuations. Attention should be paid to Indonesia’s nickel ore export policy in June.
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