1、 Trend analysis

According to the monitoring of nickel prices by Business Society, nickel prices fluctuated widely in January. At the beginning of the month, nickel prices were 130033.33 yuan/ton, but at the end of the month, nickel prices slightly dropped to 129550 yuan/ton, with an overall decrease of 0.37%, a year-on-year decrease of 23.7%.

LME nickel inventory

According to LME inventory, LME nickel inventory slightly increased in January.

Macroscopically, inflation data in the United States has slowed down, and the resilience of the US economy has increased. Relevant data shows that the core PCE price index in December recorded an annual rate of 2.9%, the lowest level in nearly three years. Prior to this, personal spending in the United States increased by 0.7% month on month in December, a new high since September 2023. Market optimism about the Federal Reserve’s interest rate cut in March has weakened.

Supply side: Capacity expansion and clearance cycle. In December 2023, the national refined nickel production reached a total of 24500 tons, a month on month increase of about 6% and a year-on-year increase of 40.57%; It is expected that the national refined nickel production will reach 23700 tons in January 2024. Major overseas nickel companies resumed production in the third quarter, with good profits and weak willingness to proactively reduce production.

In terms of demand: Some terminal industries have high prosperity, but the growth rate of demand is not as fast as supply. Alloy is the main downstream of pure nickel, and there is a very good demand for alloys in military and shipping industries. Enterprises “replenish inventory at low prices, but do not purchase at high prices.”. The demand for electroplating is relatively stable. Stainless steel inventory returned to neutral levels, and steel mills reduced production in January. The space for nickel beans used in new energy has been squeezed out. Last week, nickel prices rebounded, suppressing demand.

In summary, weak cost support and downstream buying on dips, coupled with policy uncertainty factors in the subsequent Indonesian election, have led to a more obvious attitude of downstream buying on dips and not buying at high prices. The basis is weak, and nickel prices have accumulated inventory for three consecutive weeks after rebounding. The maintenance of the MHP project in Indonesia has led to an increase in the intermediate product coefficient, continuous reduction in production and low inventory of nickel sulfate. There is a weak expectation of replenishment after the holiday, and the price of nickel sulfate is expected to stabilize while exploring an increase. It is expected that nickel prices will continue to fluctuate and grind to the bottom.