In the first half of 2024, nickel prices experienced an upward trend, influenced by macroeconomic factors such as anticipated Federal Reserve rate hikes and delays in the RKAB approval process. At the end of February, despite support from China's new energy policies, nickel prices fluctuated due to weak demand. However, a strong rebound occurred as sanctions on Russian nickel and violent unrest in New Caledonia in May drove prices to the highest point for the first half of 2024. Subsequently, prices began to decline as market oversupply emerged after May. According to Mysteel, nickel prices are expected to be under pressure in H2 2024.
On the cost side, FOB and CIF prices for lateritic nickel ore showed a downward trend in H1 2024. The rainy season in Surigao, Philippines, reduced the supply of nickel ore, while high shipping costs kept Ni 1.5% CIF prices elevated at $72. Nevertheless, increased supply from Indonesia, coupled with weakened demand from China, led to a month-long decline in prices, which reached a low of $49. After the rainy season ended in April, nickel ore prices stabilized near cost levels. In June, nickel ore shipments from the Philippines totaled approximately 19.11 million tonnes (wet), reflecting a 10% year-on-year increase. Notably, low-grade nickel ore shipments surged by 82% to 8.012 million tonnes (wet) due to its cost-effectiveness for steel smelting. In contrast, shipments of middle-grade and high-grade nickel ores fell by 14% to 11.098 million tonnes (wet) due to persistent weak demand.
Turning to supply dynamics, Mysteel's survey of 18 Chinese enterprises shows that China's refined nickel enterprises had a total capacity of 32,300 tonnes and an operating capacity of 29,000 tonnes, with an operating rate of 89.93% and a utilization rate of 82.05%. The production of refined nickel in H1 2024 reached 148,700 tonnes, marking a 7.71% increase compared to H2 2023 and a significant 38.79% rise compared to H1 2023. This production boost was primarily driven by expanded output in Northwest, East, and South China. However, several small and medium-sized manufacturers opted to cut or halt production due to cost inversions and raw material shortages amid rising nickel ore prices.
Additionally, data from China Customs indicates that China imported 41,400 tonnes of refined nickel in H1 2024, a decrease of 2,100 tonnes compared to H2 2023, representing a decline of 4.87%, and a decrease of 6,200 tons compared to H1 2023, representing a decline of 12.98%. The decline was due to the complexity of import policies and declining new long-term contracts but was mitigated by the inflow of resources from the joint venture agreement between Zhongwei Co., Ltd. and Indonesia. On the export side, China's refined nickel exports in H1 2024 were around 14,600 tonnes, an increase of 2,500 tonnes compared to the previous period, with a growth rate of 21.11%. The year-on-year increase was 4,000 tonnes, with a growth rate of 83.59%. This increase was driven by a substantial rise in overseas nickel prices and improved profitability from April to May.
In terms of inventory, China's nickel ore port inventories initially decreased but later increased, reaching 12.5442 million tonnes (wet) by the end of June, which represents a 9.04% rise since the beginning of the year. Middle- and high-grade nickel ore inventories accounted for approximately 7.3941 million tonnes (wet), reflecting a 9.77% increase. Moreover, China's refined nickel inventories continued to rise in H1 2024 due to increasing electrolytic nickel production and limited consumption chances, despite a surge in exports driven by increased profits in May. It was estimated that China's refined nickel stock in 27 warehouses rose by 50.1% to 32,500 tonnes, with warehouse receipt inventory up by 8,800 tonnes to 20,100 tonnes and spot inventory up by 1,964 tonnes to 8,143 tonnes. Additionally, LME nickel inventory increased by 31,000 tonnes to 95,000 tonnes, primarily from nickel sheets, as new Chinese electrolytic nickel brands gained LME delivery qualifications.
In conclusion, nickel prices in H1 2024 exhibited a fluctuating upward trend influenced by the slow approval process of the RKAB, the rainy season's impact on nickel ore supply in the Philippines, and other complex international factors. According to Mysteel, it is likely that nickel prices will remain under pressure in the second half of 2024.
Written by Cora Ji, jiruyan@mysteel.com
Edited by Aggie Hu, huchenying@mysteel.com