1、 Trend analysis

According to the nickel price monitoring of the business society, the nickel price fell violently in June. At the beginning of the month, the nickel price was 219266.67 yuan / ton, and at the end of the month, the nickel price fell to 183916.67 yuan / ton, with an overall decline of 16.12% and a year-on-year increase of 33.11%. Compared with may, nickel price in June was weaker.

Macro aspect: in June, the Federal Reserve of the United States (fed/ fed) took historic measures to combat inflation, raising interest rates by 75 basis points. The initial value of manufacturing PMI in Europe and the United States fell in June than expected, indicating that the demand for industrial products shrank significantly in June, intensifying the market’s concern about the economic downturn. The “copper oil ratio” has continued to decline and has fallen to a low in recent five years, indicating that the risk of economic recession has intensified. On the whole, the nonferrous metals sector has fallen sharply recently under the condition of tight liquidity and continuous fermentation of economic recession concerns.

Supply: lunni inventory is still at a low level. The rainy season in the Philippines has passed, and a large number of nickel ore shipments have been started. Indonesia’s nickel pig iron production has increased at the pace of 2000-3000 metal tons per month since 2021. In the future, Indonesia’s capacity investment will continue. The expansion of the scale of converting nickel pig iron to high matte and the release of the output of wet process intermediates. Due to the continuous large-scale nickel iron project in Indonesia, the tight situation of nickel iron in China has been eased. Since the second quarter, the global nickel supply has changed from shortage to relaxation. In 2022, the global nickel oversupply will reach 108000 tons.

Demand: in the downstream, due to the impact of the domestic epidemic in the first two months, the main downstream stainless steel overhaul of nickel has reduced production, while the growth rate of ternary material production has also slowed down significantly, and the demand for stainless steel and ternary materials is weakening. Among them, the national stainless steel output in May totaled about 2.93 million tons, an increase of only 30000 tons compared with the total output in April. It is expected that the stainless steel profit will continue to weaken in June, and the production reduction will continue due to various reasons such as the shutdown and maintenance of enterprises. The estimated output is 2.78 million tons, a decrease of 150000 tons. The growth rate of new energy vehicles picked up slightly. In May this year, the production and sales of automobiles reached 1.926 million and 1.862 million respectively, with a month on month increase of 59.7% and 57.6% respectively, and a year-on-year decrease of 5.7% and 12.6% respectively.

To sum up: the macro negative, low inventory, loose supply and weak demand led to a decline in nickel prices in June. In July, there was still the possibility of raising interest rates by 75bp, adding to the increase in supply, the recovery of downstream stainless steel demand was weak, and the nickel price in July should not be too optimistic, but the low inventory and tight supply still had support. It is expected that the nickel price in July will still operate in a wide range and weak trend.