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Nickel falls: Since yesterday, Wednesday, February 3, 2021, also to our surprise, nickel prices on the LME have fallen by up to 8.5% and also on the SHFE by over 6%. We had already seen a consolidation in the nickel market over the last few days, but such a sharp and surprising drop had to have a specific trigger. Time for an analysis.

Read also: Indonesia, Tsingshan and the crashed nickel – What is really happening in the nickel market?

Nickel falls - Who is to blame? Nornickel or Tsingshan?
Nickel falls – Who is to blame? Nornickel or Tsingshan?

Currently, two versions are being circulated in the media.

1. The unlikely version: Nornickel is to blame

Nornickel had announced on February 24, 2021 that there had been water ingress at two of its mines (Source). Now that the nickel price had fallen so much yesterday, it was spread in the media that Nornickel had announced a restart of the mines on March 3 and that there had been oversupply fears for nickel because of this.

No restart date for Nornickel mines in sight yet

However, Nornickel has not announced a restart at all yet, but only reported that they will discuss a restart schedule on March 9 (Source). In addition, Nornickel’s Oktyabrsky and Taimyrsky mines produce copper-nickel ore. Which should have little to no impact on stainless steel prices.

2. What was the more likely trigger: Tsingshan announces deal for 100,000 MT nickel matte

On March 3, 2021, Tsingshan announced (Source) that they had signed a deal with Huayou Cobalt Co, Ltd and CNGR Advanced Material Co Ltd, to supply 100,000 MT of nickel matte for battery manufacturing.  After the announcement of this deal, nickel prices fell on SHFE (6%) and LME (8.5%), which also affected stainless steel futures in Shanghai.

Concerns over undersupply of nickel for batteries mitigated

With this deal, a stable supply of nickel for the growing battery market is emerging for the time being. The price of nickel had risen sharply in recent weeks due to concerns about undersupply.

Nickel Pig Iron: Important for batteries and stainless steel

What’s interesting here is that nickel matte can be made from Nickel Pig Iron. And Nickel Pig Iron is also used in stainless steel production.  Whether there will be enough cheap NPI left for stainless steel production after this announcement remains to be seen.

Nickel falls: What are stainless steel prices doing now?

However, analysts in Asia believe that the price of stainless steel will recover quickly. Due to the current high demand and undersupply in the market (Source).

We will continue to monitor the market for you

We will continue to monitor the market for you. Should there be further changes in one direction or the other, we will inform you as soon as we have gained an overview. If you have any questions, please feel free to call us at +49 7642 9282851 or write us an email to info@steelnews.biz.


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