Nickel prices will continue to fluctuate strongly in May

In April, supported by the resonant rise in non-ferrous metal prices and its own fundamentals, nickel prices rose significantly, with a monthly increase of more than 9%. As the non-ferrous metal sector consolidates, the main contradiction between nickel supply and demand is expected to switch, and nickel prices are expected to continue a strong and volatile trend in the short term.
Changes in macro expectations
Expectations for the Federal Reserve to cut interest rates fluctuate, and the risks of economic recession and declining demand still affect the market. The latest round of interest rate decisions by the Federal Reserve are in line with market expectations, and the U.S. non-farm payroll data in April was worse than expected, prompting the market to increase bets on the Federal Reserve to cut interest rates. The market currently expects that the Federal Reserve may cut interest rates twice this year, and the impact of interest rate cut expectations on the market will continue. .
In the short term, the US dollar index fluctuated and weakened, which slightly boosted the prices of nonferrous metals. The price of non-ferrous metals rose resonantly in April. The main macro-supporting factor was the significant rebound in manufacturing data of major economies. As the growth rate of the manufacturing industry in major economies slows down, the market’s concerns about demand have increased. The rhythm of the resonance rise in non-ferrous metal prices has changed. In the short term, it is undergoing a strong consolidation, and the price trend of non-ferrous metals has a tendency to diverge and fluctuate.
The impact of disturbance at the nickel ore end still exists
Since 2024, the progress of Indonesian nickel ore approval quotas has been slow, and the impact on the nickel market is still continuing. Indonesian officials originally expected to complete the nickel ore approval progress at the end of March, but after announcing progress in late March, the follow-up is still slow. Approval is in progress, and no clear approval progress has been announced. Slow approval progress continues to have an impact on Indonesian nickel ore supply in April, and the cost support for Indonesian nickel products continues to exist.
The Indonesian Investment Minister stated at the end of April that the country had issued a new mining license to the nickel mining company PT Vale Indonesia (Vale Indonesia), which shows that the approval is still in progress. In addition, although the supply of nickel ore in the Philippines began to increase significantly in April, the sea freight of laterite nickel ore shipped from the Philippines to the country continued to rise. As of the end of April, the sea freight had climbed to more than US$14/ton. Coupled with the continued recovery of domestic NPI (new product introduction) prices, it is expected that the CIF (cost, insurance, freight) price of Philippine laterite nickel ore may usher in a round of increase in May. The strong nickel ore end continues to provide strong cost support for nickel products.
Refined nickel supply pressure continues to increase
The national refined nickel output in April is expected to be 25,900 tons, a month-on-month increase of 4%. The output of some electric nickel plants still keeps climbing. From January to April 2024, the country’s cumulative output of refined nickel was 100,700 tons, a year-on-year increase of 46%. Affected by the continued increase in production, domestic refined nickel stocks continue to accumulate. From the perspective of refined nickel costs, refined nickel produced from externally purchased raw materials generally suffers losses, and the external market is relatively volatile, which brings strong support to raw material prices.
From the perspective of import and export, China’s refined nickel imports continue to fall, while exports fluctuate and rebound. China has gradually become an export supplier of refined nickel, accounting for about 10% of the LME (London Metal Exchange) nickel warehouse receipt inventory. share.
From the perspective of the international market, the output of major refined nickel production companies has varied. Russian nickel production has decreased by about 10% year-on-year, while Glencore nickel production has increased by 14% year-on-year, and Vale nickel production has decreased by 4% year-on-year.
Downstream demand has improved
Stainless steel production will continue to grow year-on-year in 2024. From January to April, my country’s stainless steel output is expected to exceed 11.6 million tons, a year-on-year increase of nearly 8%. Indonesian stainless steel production has also grown significantly, with output increasing by nearly 37% year-on-year during the same period. Stainless steel row production is expected to continue to grow slightly in May. Stainless steel prices rebounded in April, profits improved, and actual output was higher than planned output at the beginning of the month, creating a positive pull for nickel demand.
Due to the current supply of raw materials and changes in the macro environment, the market’s expectations for excess supply and demand of nickel pig iron may be adjusted, and the price tolerance of nickel pig iron has also increased. The transaction price of nickel pig iron has rebounded, which has a certain impact on the nickel industry chain. positive driving role. Since the beginning of this year, my country’s apparent consumption of stainless steel has increased significantly year-on-year. However, domestic stainless steel futures inventories are relatively high. Although spot inventories have fallen from highs, there is still room for improvement. We will pay attention to demand improvement in the future.
From the perspective of new energy battery demand, the restocking of raw materials and the tightening of nickel sulfate supply in the first quarter drove up the price of nickel sulfate. In May, it is expected that ternary precursor companies will still have demand for raw material replenishment, which will continue to bring good positive feedback to nickel sulfate.
To sum up, in April, affected by macro and micro resonance, nickel prices closed up significantly. In May, downstream demand is expected to be good, and the macro resonance rhythm may change. The author predicts that the nickel price will still be dominated by strong fluctuations in the market outlook.