European nickel briquette premiums at record highs; US, China markets quiet
Spot premiums for nickel briquettes continued to rise, in line with higher estimates and offers in a busy European market in the week to Tuesday April 19, but activity was scarce in the United States and China
- Nickel briquette premiums in Europe reach record highs
- US spot market muted with minimal deals reported
- Poor arbitrage conditions with worsening Covid-19 situation mutes Chinese market
Briquette premiums reach record high level in Europe
Nickel briquette premiums rose for the second week in a row in Europe, amid higher estimates and with liquidity improving. The premium range is at its highest level since Fastmarkets began assessing the market in 2005.
Fastmarkets assessed the nickel briquette premium, in-whs Rotterdam at $2,000-2,5000 per tonne, an increase of $500 per tonne across the range.
There was one deal reported to Fastmarkets at the top of the current range and another at above $3,000/t. But the second deal was discarded as it fell below the minimum tonnage requirements.
“The market is getting into a real groove now,” one producer said, noting the change in sentiment following weeks of instability.
He added, however, that there still appears to be a level of “consternation” in the market over Russian material since Russia decided to invade Ukraine, which is having an impact on the full suite of refined nickel products.
“Nobody knows if Russia will be able to export supplies next month,” a trader in Europe added.
This continued uncertainty and the current high LME price continues to keep premium ranges wide because market participants are continuing to have difficulty in gauging the current market.
Following a significant increase in the week to April 13, cut cathode premiums held steady in Rotterdam over the following seven days, with limited liquidity reported to Fastmarkets.
Fastmarkets assessed the 4x4 cathode premium, in-whs Rotterdam at $800-1,200 per tonne, which is the highest Fastmarkets’ assessment since June 8, 2007.
Shortness of supply, high cutting and packaging costs and rising carrying costs continue to impact the spot premiums for 4x4 cathodes within Europe. And market participants said that the acute tightness in uncut cathodes and long queues have also had an impact on premiums.
There was one deal reported to Fastmarkets at more than $3,500 per tonne for 4x4 cathode. However, the deal was discarded as it fell below the minimum tonnage requirements and it remains to be seen if such a level is really achievable in the spot market - something that will be assessed in future pricing sessions.
Persistent tight supplies within Europe continue to affect the spot market, with current on-warrant LME warehouse stocks in Rotterdam standing at 23,082 tonnes. But while on-warrant stock levels have increased steadily so far in 2022, they are said to remain tightly held - with LME data indicating that one party holds 50-79% of warrants globally.
The uncut cathode premium was also unchanged this week with few participants able to accurately gauge the current market.
Fastmarkets assessed the nickel uncut cathode premium, in-whs Rotterdam at $400-600 per tonne.
There was, once again, a deal reported to Fastmarkets significantly above the current range, but it was not included as it was below the minimum tonnage requirement. Fastmarkets will look to confirm the reflective level of the uncut cathode spot market in future pricing sessions.
US spot market quiet
The US nickel spot market was quiet with no deals to report in the week to April 19, mainly due to the recent wild price moves, fears of Russian supply cut-offs and the Easter holiday, sources told Fastmarkets.
Fastmarkets’ assessment for the nickel 4x4 cathode premium, delivered Midwest US, remained at 200-400 cents per lb on April 19, unchanged from the previous session. This is the third consecutive week unchanged since the 44.58% increase from the 180-235 cents per lb seen on March 29, putting the premium at an all-time high and marking Fastmarkets widest ever range for the grade.
Notably, this follows the 97.62% premium increase seen on March 29 session when the premium rose from 80-130 cents per lb seen in the previous two sessions following the LME’s initial closure.
“I do not expect anything to change in the near future,” one US source told Fastmarkets. “The high prices are here to stay and it will just take time for the market to [adjust to] the new normal.”
Fastmarkets assessed the nickel briquette premium, delivered Midwest, US, at 175-250 cents per lb on Tuesday April 19, unchanged from the previous session. While briquettes had been trading at a premium to cathodes since November 2021, this relationship reversed on March 29.
Supply across grades remains tight with little inventory available to purchase. Another source said this may change in the future, however, because long-term supply contracts will become unfeasible in the current logistical environment. In theory, this should lead to shorter-term supply agreements and more spot activity.
China nickel full plate market static
Premiums for nickel full plate imported into China remained unchanged due to a lack of spot trading, with the arbitrage window between London and Shanghai still unfavorable in the week to April 19, Fastmarkets understands.
Fastmarkets assessed the nickel, min 99.8%, full plate premium, cif Shanghai at $300-350 per tonne on Tuesday April 19, the same as a week earlier.
Fastmarkets assessed the nickel, min 99.8%, full plate premium, in-whs Shanghai at $300-350 per tonne on Tuesday April 19, unchanged week on week.
Nickel full plate premium prices, meanwhile, have been unmoved for six weeks with low trading activity over that period.
“Although the arbitrage loss decreased a bit, it is still unfavorable and traders have minimal interest in importing right now,” a Shanghai-based trader told Fastmarkets.
“Because of the worsening Covid-19 situation in China, however, tighter control measures and logistics disruptions have combined to affect demand in the spot market,” she added.
Market participants also said that the domestic nickel full-plate market is also tight because of the reduction in imported materials, which underpins the premium prices.
The arbitrage for imported nickel full plate to China sits at a loss of $1,692 per tonne on Tuesday April 19, down by $1,869 per tonne from a loss of $3.561 per tonne a week earlier, according to Fastmarkets’ calculations.