Price trend: (8.9-8.15)
This week, nickel prices showed a trend of rising and falling. According to the monitoring of the commodity market analysis system of Shengyi Society, on August 15th, spot electrolytic nickel was reported at 121850 yuan/ton, with a weekly increase of 0.58%, but still a year-on-year decrease of 5.40%. At the beginning of the week, nickel prices surged due to macroeconomic favorable factors such as the expected increase in interest rate cuts by the Federal Reserve and the temporary suspension of tariffs between China and the United States. However, they later fell back due to factors such as high inventory suppression and weak demand for stainless steel, maintaining an overall volatile consolidation pattern.
In terms of market transactions, there has been an increase in demand purchases after prices have fallen. Traders have reported that some downstream companies have hit low prices, but the overall market is still mainly on a wait-and-see basis, and the sustainability remains to be observed.
Macro: Loose expectations support, but policy uncertainty still exists
The expectation of the Federal Reserve’s interest rate cut has strengthened: the US CPI in July was 2.7% year-on-year, lower than the expected 2.8%. The market’s probability of a rate cut in September has risen to 94%, and the US dollar index has fallen to around 98, supporting metal prices.
Suspension of Sino US trade friction: Both sides continue to agree to suspend the 24% tariff for 90 days to alleviate market concerns, but the 10% benchmark tariff still exists and there are still variables in subsequent negotiations.
Geopolitical tensions ease: US and Russian heads of state meet to discuss a ceasefire in Ukraine, leading to a cooling of market risk aversion. However, Zelensky refuses a “territorial exchange,” and further progress remains to be observed.
Domestic industrial demand remains stable: In July, the added value of industries above designated size increased by 5.7% year-on-year and 0.38% month on month, indicating stable demand in the manufacturing industry, but the direct boost to nickel prices is limited.
Macro summary: Short term liquidity easing expectations support nickel prices, but high inventory and weak demand limit the rebound height, and the market is still waiting for clearer policy signals.
Supply side: inventory pressure remains high, mineral prices are differentiated
Nickel ore supply: Indonesian nickel ore prices remain stable (1.8% Ni FOB $78/wet ton), with stable supply. The low-grade nickel ore in the Philippines continues to decline (0.9% Ni CIF $42/wet ton, down 2.3% weekly), mainly due to the end of the rainy season and an increase in shipping volume.
Inventory pressure still exists: LME nickel inventory decreased by 570 tons per week to 211662 tons. Shanghai nickel inventory increased by 1520 tons to 22141 tons per week, and remains at a high level overall.
Smelting profit pressure: The production profit margin of nickel pig iron (NPI) has dropped to 3.2%, and some enterprises have reduced production, but it has not yet formed a significant constraint on the supply side.
Demand side: weak recovery of stainless steel, slowing growth of new energy
Stainless steel demand: Production scheduled for August was 3.3041 million tons, a month on month increase of 2.29% and a year-on-year decrease of 1.64%, indicating a transition from off-season to peak season, but slow destocking and average market transactions. On August 15th, the benchmark price of stainless steel in Shengyi Society was 12264.29 yuan/ton, an increase of 1.42% per week, but terminal procurement remains cautious.
New energy demand: The production of ternary precursors increased by 5.71% month on month in July, but considering the digestion of pre orders in August, the growth rate is expected to slow down to 5.4%. The production of ternary materials increased by 5.75% month on month in July, and the expected growth rate in August is expected to drop to 3.07%, with a marginal slowdown in demand growth. In terms of spot purchases, when the price drops below 121000 yuan/ton, there is an increase in demand purchases, but the overall market is still dominated by destocking, and the sustainability is questionable.
Future outlook:
The expectation of interest rate cuts by the Federal Reserve and progress in US China trade may support a slight increase in nickel prices due to liquidity, but geopolitical uncertainty and high inventory pressure are restraining the rise in nickel prices. It is expected that nickel prices will continue to fluctuate.
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