At the end of 2022, the price of nickel futures soared again to 230,000 yuan per tonne, and the price of stainless steel futures also steadily recovered after falling in the middle of the month. In the spot market, demand for both nickel and stainless steel was weak and trading was sluggish. As the Spring Festival approaches, companies associated with the network of stainless steel enterprises are actively stocking up before the holiday as follows.
        Pure Nickel Refining Enterprises: According to SMM research, some nickel-based alloy production enterprises are planning to maintain normal production during the Spring Festival. To that end, these companies tend to stock up at the beginning of January, given that logistics can be put on hold during the holiday period. Some small alloy businesses still have plans to shut down production over the holidays. Therefore, growth in demand for pure nickel in the pre-holiday alloys sector is limited. In addition, due to the sluggish market this year and the impact of the covid-19 pandemic, the electroplating plant went on vacation at the end of December after the order was delivered. They won’t resume production until after the Lantern Festival. Since the price of nickel fluctuated at a high level throughout December, electroplating plants mainly bought raw materials when the price was affordable and stocks of cheap raw materials were relatively ample. Currently, nickel prices on the Shanghai Futures Exchange have reached an eight-month high. Most electroplating plants do not have a production plan for January and are worried about financial costs amid nickel price volatility, so there is no clear replenishment plan. As for the nickel wire and nickel mesh sectors, January is expected to be less affected by the epidemic. At the same time, manufacturers will have to purchase raw materials to maintain normal production during the Spring Festival. In this regard, the index of stocks of raw materials in January 2023 may increase. Demand for pure nickel in the NiMH battery industry has been low. Orders from old customers have plummeted, nickel prices have skyrocketed again, pressure on NiMH battery companies has risen sharply, and there is no pre-holiday warehousing plan. Most businesses tend to be pessimistic about the market outlook and plan to go on vacation early.
        Nickel ore refiners: The nickel ore deal was light in December. As of the end of the year, the CIF transaction price and the quotation for nickel ore with a nickel grade of 1.3% were about US$50-53 per tonne. Demand for nickel ore from nickel iron smelters usually does not change during the Spring Festival because nickel iron smelters usually start harvesting heavily before the rainy season. This is mainly due to limited shipments of nickel ore in the southern Philippines during the rainy season. Since NPS prices remain in a range, NPS factories are unwilling to increase production. So they are steadily depleting nickel ore. Judging by the inventory data at the plant and the lateritic nickel ore at the port, there is relatively sufficient raw material for nickel pig iron.
        Relevant enterprises in the nickel sulfate production chain: As for nickel sulfate, the current stock of raw materials in the nickel salt plant is sufficient, and a normal stock is maintained for long-term supply before the festival. But some nickel sulphate producers cut production in December due to maintenance and weak demand for refining. Therefore, the consumption of raw materials is relatively slow, and the growth of stocks of raw materials increases financial costs. In terms of downstream demand, which was impacted by the removal of subsidies for new energy vehicles, the production of triple precursors declined significantly this month, resulting in a sharp decline in demand for nickel sulphate. Since some triple precursor producers already had enough stocks of nickel sulphate to support production until the new year, they are not interested in stockpiling.
        Stainless steel plants using NPI: As the New Year approaches, almost all stainless steel plants have accumulated enough raw materials to produce in January. Some companies’ stocks of raw materials may even support them during the Lunar New Year in February. Basically, when most stainless steel mills stock up in mid-December, they’ve already got raw materials ready for January. There are also a small number of plants stocking up at the end of December. Some enterprises may purchase more raw materials after the New Year to ensure production during the Spring Festival. In general, most stainless steel mills have already purchased stocks. In this case, the supply of NFCs on the spot market is limited, and the inventories of NFC factories have decreased significantly. Regarding nickel pig iron in Indonesia, given the long shipping period, most of the shipments are long-term orders and the spot market is limited. However, some traders who are optimistic about the market outlook still have some domestic nickel iron and Indonesian nickel iron in stock. It is expected that part of the cargo will arrive on the spot market after the New Year holidays.
        Plants for the production of stainless steel ferrochromium. At the end of the year, spot supplies of ferrochromium remained limited. Although some stainless steel mills prepared for purchases in early December, supply of ferrochromium on the spot market is limited. On the one hand, with the onset of the dry season, more plants are closing, and the productivity of ferrochromium plants in southern China is still at a low level. On the other hand, most ferrochromium plants in North China only support production for long-term orders. In addition, recent increases in the price of chromium ore and coke have pushed up costs for ferrochromium smelters. Stainless steel mills further boosted high-carbon ferrochromium prices in January to meet demand for pre-festival winter stocks.
        Stainless steel restocking: At the end of the year, overall trading in the stainless steel market was sluggish. The spread of the epidemic has affected the trading and processing of stainless steel, resulting in a decrease in the productivity of processing plants in many places. Some refineries are planning early holidays. The stocking of different series of stainless steel is different. No. 200 series stainless steel recycling facilities have yet to begin heavy stockpiling. Traders already have some #300 series stainless steel in stock, but recycling companies are unwilling to stockpile. The market is still in a wait-and-see position, and price and terminal sentiment will show obvious trends from the New Year to the Spring Festival. If the impact of the epidemic subsides by then and final consumption may increase, processors may consider stockpiling. #400 series stainless steel has been more active lately. The main reason is that some processing plants have gradually reopened to fulfill overdue orders. At the same time, the futures price of #400 series stainless steel rose along with commodity prices, and refiners’ willingness to restock increased. Source: SMM Information Technology.