Global nickel premiums under pressure from weak demand
Global nickel premiums were under pressure from weak demand in the week to Tuesday December 6, with the premium for nickel 4x4 cathode in Rotterdam widening downward, while the others were flat
European spot market premiums for refined nickel under pressure
Spot market premiums for refined nickel products in Europe came under further pressure on Tuesday after some participants noted weakness in demand ahead of the year-end.
“Everything seems to have shifted again,” a trader said of the poorer demand emerging in the region.
“We are expecting business to slow in the next few weeks,” the trader added.
The premium for 4x4 cathode in the region widened downward following liquidity reported below the previous range. This is the first move the 4x4 cathode premium has registered in eight weeks.
Fastmarkets assessed the nickel 4x4 cathode premium, in-whs Rotterdam at $800-1,300 per tonne on Tuesday, widening downward by $100 per tonne from $900-1,300 per tonne on November 29.
One deal was reported to Fastmarkets at $825 per tonne for a small tonnage, supporting the move lower.
Participants’ estimates of the premium level for 4x4 cathode continue to diverge however, with some participants seeing some brands as low as $800 per tonne, while others saw levels of up to $2,000 per tonne as achievable.
No liquidity in line with Fastmarkets’ methodology was captured at levels that high though, preventing any move for now. Fastmarkets will look to test in future sessions if such levels are reflective of the open and competitive market.
Supply of 4x4 cathode is said to be tight within Europe, which continues to support premiums at historically high levels. But some participants note that many consumers are looking to move away from using 4x4 cathode, opting to use briquette instead where availability is better.
Others, however, noted this option is not available to some consumer segments that rely on 4x4 cathode.
“Some alloy producers are able to be flexible with inputs, some are not,” a second trader in Europe said.
Elsewhere, participants said that briquette premiums remain under pressure due to greater supply, though the premium range remained stable this week despite decreasing demand.
Fastmarkets assessed the nickel briquette premium, in-whs Rotterdam at $500-850 per tonne on Tuesday, unchanged from a week earlier.
“I think interest rates and energy costs are having impact all over, and with consumers reducing year-end intake we are seeing it quieter all round,” a producer source said, commenting on the current market conditions.
Elsewhere, Fastmarkets assessed the nickel uncut cathode premium, in-whs Rotterdam at $400-800 per tonne on Tuesday, unchanged from the prior week.
Uncut cathode supply is said to be increasing in the region with 1,020 tonnes of full plates delivered into LME warehouses in Rotterdam on Tuesday.
Total availability still remains historically tight though, keeping the premium supported for now.
Wide premium ranges across the nickel products continue to be heard in Europe, with participants still seeing a divergence in valuations between certain brands in the region.
Full plate nickel premiums remain flat in China
Premiums for nickel full plate imported into China were again unchanged in the week to Tuesday, amid an absence of import opportunities.
Fastmarkets assessed the nickel min 99.8% full plate premium, cif Shanghai at $350-450 per tonne on Tuesday, unchanged since September 20.
The assessment for the nickel min 99.8% full plate premium, in-whs Shanghai was $400-450 per tonne on the same day, also unchanged since September 20.
Despite a raft of policies issued by the Chinese government to ease Covid-19 restrictions recently, which has led to expectations of the recovery of demand in China and a following rally of nickel prices in the futures market, physical demand did not improve.
Instead, multiple market participants pointed to high nickel prices as one factor hindering import activities.
The three-month official nickel price on the LME was at $28,595-28,605 per tonne on Monday, up from $25,300-25,350 per tonne on November 28.
“The underlying prices are too high – who would bear the losses to import?” a consumer source said.
The lackluster demand has also been evidenced by growing stock levels in exchange-registered warehouses. Nickel inventories in Shanghai Futures Exchange-listed sheds totaled 3,668 tonnes on December 2, up by 11.46% week on week.
US Nickel premiums unchanged with limited spot activity
US nickel premiums were flat again in the week to Tuesday amid limited spot activity.
Fastmarkets assessed the nickel briquette premium, delivered Midwest, US at 120-180 cents per lb on Tuesday, unchanged since September 27.
Similarly, Fastmarkets assessed the nickel 4x4 cathode premium, delivered Midwest, US at 120-180 cents per lb on Tuesday, also unchanged since September 27.
Market participants’ opinions of premium levels were unchanged this week, saying that activity was quiet. Fastmarkets did not have a single 4x4 cathode or briquette deal reported this week.
“It is extremely quiet out there, I haven’t seen any activity since the 4x4 trades last week,” a trader in the United States said.
Other market sources echoed this sentiment while continuing to report that 2023 negotiations are at a standstill.
Despite the current lull, most participants believe that activity will resume in the first quarter of 2023.
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