According to the monitoring of nickel prices by business associations, the spot price of nickel on May 27 was 100766.67 yuan/ton, which was 3.17% higher than the previous trading day of 97666.67 yuan/ton, 12.58% higher than the beginning of the year, and 9.1% lower than the previous trading day. Spot nickel rose by about 3,200 yuan/ton today. The nighttime LME three-month nickel rallied sharply, closing in the early morning of May 25 at $12,380 per ton, or 4.12 per cent. Starting at 2:30 p.m. this afternoon, the non-ferrous inner and outer plates flushed red collectively. At one time, Shanghai nickel surged from 97,000 yuan per ton to 103,000 yuan per ton, an increase of more than 3%.

Indonesian elections sparked riots fearing an impact on nickel supply

The recent Indonesian coup coincided with the holidays in various mines during Ramadan (mid-May-mid-June), and the overall output of Indonesian nickel ore was reduced compared with April. Protests triggered by recent election results in Indonesia have killed at least six people, injured 200 others and arrested more than 250 people. The market generally believes that the riots in Indonesia are the main reason for the sharp rise in nickel prices.

As the largest supplier of nickel ore in China, Indonesia is highly dependent on imports of nickel ore and ferronickel from Indonesia. The data show that the proportion of imports of nickel ore and ferronickel from Indonesia in the first quarter of this year is more than 60%. The extreme actions of the anti-forces in Indonesia may affect the exploitation of nickel ore or lead to a further ban on the export of nickel ore in Indonesia in the future. In addition, the exaggeration of media news and the association of historical events with more serious consequences may make it difficult for Chinese and Chinese enterprises to invest in Indonesia in the future. As the world’s largest nickel mining area, as well as an important stainless steel and ferronickel producing area, Indonesia’s major political events are bound to have a long-term impact on the nickel market.

Reducing Vehicle Purchase Tax and Benefiting New Energy Vehicles

On the afternoon of the 24th, the Ministry of Finance issued the Announcement of Specific Policies on Vehicle Purchase Tax, which was calculated according to the actual transaction price, and was aimed at stimulating domestic automobile consumption, including new energy vehicles. Therefore, the demand for nickel from ternary batteries was improved and the price of nickel was boosted.

Nickel fundamentals are still weak

Fundamentals have not heard good news yet. New production capacity of ferronickel at home and abroad exceeds expectations. Supply will turn from tightening to a small excess situation. With the resumption of production capacity of ferronickel maintenance in June and the release of new production capacity, the degree of excess supply will be aggravated. At that time, production profits of high ferronickel will continue to decline. At the same time, the downstream nickel stainless steel market continues to be weak. Nearly the end of the month, some stainless steel factories on the market continue to arrive, stainless steel continues to basement, while the downstream demand has not improved, shipment by shippers is more difficult, the firm price attitude of stainless steel factories has been relaxed in the early stage, and the spot market turnover is still flat.

It is difficult to reverse the trend of nickel without significant terminal warming up

The sharp rise in nickel prices is caused by the political events triggered by the Indonesian riots, the reduction of vehicle purchase tax and the improvement of nickel prices. On the other hand, the weakening of the US dollar has boosted metal prices. But the riot was mainly in the capital Jakarta, not a nationwide campaign. The major producers of nickel ore, ferronickel and stainless steel were less affected by the riot and were basically in normal production. They returned to work on the 5th day and the situation is controllable. And the dollar may strengthen again. New energy vehicles are only a small part of nickel price demand. Fundamental factors will continue to be the driving force of nickel price trend. The short-term sudden rise in nickel prices is difficult to sustain. Only the improvement of downstream demand can support the real bottom rebound of nickel prices. However, stainless steel has accumulated counter-seasonally. At present, there is no sign of improvement in demand. Non-ferrous analysts of business associations believe that nickel prices will operate weakly in the short term.