According to the price monitoring of Business Society, in May, the price of stainless steel first fell and then increased. As of the end of the month, the spot price of stainless steel was 13195.71 yuan/ton, a decrease of 0.09% from the beginning of the month and a year-on-year decrease of 4.08%. Upstream nickel showed a strong overall trend in May. As of the end of the month, the spot nickel quotation was 143583.33 yuan/ton, an increase of 9.69% from the beginning of the month and a year-on-year decrease of 25.74%.
| Gamma-PGA (gamma polyglutamic acid) |
Macro level
The US CPI in April increased by 3.4% year-on-year, while the core CPI growth rate in April decreased from 0.4% in March to 0.3% month on month, marking the first decline in six months and remaining unchanged from the expected 0.3%. This data has strengthened market expectations for the Federal Reserve’s interest rate cut in September. In addition, domestic real estate policies are relatively active. Hangzhou and Xi’an have lifted purchase restrictions, and the national level has issued heavyweight support policies, such as reducing the down payment ratio, canceling the lower limit of real estate interest rates, and lowering housing provident fund loan interest rates, further promoting the rise of non-ferrous metals. However, in late May, the latest meeting minutes released by the Federal Reserve conveyed a hawkish attitude, suggesting that there is still a possibility of future interest rate hikes, which led to a strong rebound in the US dollar index and put pressure on colored prices.
Nickel fundamental surface
Supply side
The fourth largest nickel producing country in the world, New Caledonia, has experienced unrest, forcing the local nickel wet intermediate smelting project to stop production, and the normal operation of mines has also been affected, with almost no production. In addition, the approval of Indonesian nickel mines did not meet expectations. Currently, the three-year approval quota for Indonesian nickel mines by RKAB is 217.6 million wet tons, accounting for approximately 26.21% of the total number of applications approved. The circulation resources of Indonesian nickel mines are relatively scarce. The tight availability of nickel iron circulating resources, combined with these news factors, has helped push nickel prices to a seven month high. There are still electroplating nickel projects in China and Indonesia that are put into operation, and pure nickel production will continue to grow rapidly. The expectation of nickel oversupply remains unchanged, and global inventories continue to accumulate. It is expected that the production in April will further increase to 25900 tons, a month on month increase of 4%. Some nickel manufacturers are still in the stage of increasing production. At the same time, manufacturers that reduced production in March are expected to resume production in April, and the production of newly invested nickel plates is also gradually increasing.
LME nickel inventory slightly increased
As shown in the above figure, in May, LME nickel inventory has slightly increased, as of the end of the month, LME nickel inventory is 83730 tons, up 6.63% from the beginning of the month and 30.51% from the beginning of the year.
On the demand side: Alloy is the main downstream of pure nickel, and there is a very good demand for alloys in military and shipping industries. Enterprises are buying at low prices. The stainless steel factory will resume production in May. The demand for electroplating is relatively stable. The production schedule of the new energy ternary system declined in May.
Stainless steel basic surface
Since May, the stainless steel market has rebounded after a decline. After the May Day holiday, the replenishment progress of the stainless steel market was less than expected, and there was a certain accumulation of market inventory. Subsequently, under the influence of the gradual decline in futures trading, the stainless steel market price followed the trend of weakening and adjustment. Under the influence of Putin’s visit to China and frequent geopolitical conflicts in mid to late October, the overall strength of the non-ferrous metal market has been dominant, with raw material nickel continuing to rise, driving the willingness of the stainless steel market to explore price increases. Although the rise in prices has driven some terminals to accept goods, the overall focus is still on receiving goods in demand, with high-level transactions hindered and the market under pressure rising.
Supply side: Domestic steel mills reduced production in April less than expected, and are expected to resume production in May. According to Mysteel statistics, in April 2024, the crude steel production of 300 series from 43 stainless steel plants in China was 1.6832 million tons, an increase of 4500 tons month on month and 0.27% month on month, an increase of 18.35% year-on-year; In May, the 300 series produced 1.767 million tons, an increase of 4.98% month on month and 9.75% year-on-year. On the Indonesian side, Qingshan and Delong produced 425000 tons in March, 344700 tons in April, and an expected 390000 tons in May.
As of the end of the month, the total inventory of stainless steel was 106.86 tons, a decrease of 3.7% compared to last week, with both cold and hot rolling inventories falling.
On the demand side: In the off-season background, the downstream consumer demand side performs poorly and purchases on demand. The inventory in the market has increased again, the supply of goods is not tight, and steel mills continue to distribute goods within the week. The overall inventory digestion is slow, and merchants are more cautious in purchasing. The current spot circulation resources are relatively sufficient, with complete specifications and acceptable inventory. The downstream sales pressure still exists.
In summary, the disturbance at the mining end has played a certain supporting role in nickel prices, but lacks the driving force of new variables, and the degree of assistance in price increase is limited. The fluctuation of overseas macro expectations, coupled with the overall pressure on the non-ferrous sector, has put pressure on nickel prices in the short term. It is expected that nickel prices will fluctuate weakly in June.
For stainless steel, in May and beyond, as stainless steel production profits shrink again, there is a certain expectation of a reduction in market supply. However, with the increasing impact of the traditional off-season of consumption, the demand side also shows a reduction expectation. In June, considering that the impact of unexpected news gradually dissipates, the subsequent news of US tax hikes on electric vehicles, medical supplies, solar products and other products in China may create a bearish drag on the demand side, increasing the possibility of pressure on the stainless steel industry in June. It is expected that stainless steel prices will fluctuate weakly in June.
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