Recently, the main nickel futures contracts in Shanghai have rebounded continuously from the price of 122000 yuan/ton, and have seen daily gains of over 1.3% in the past two trading days. As of 10:15 am today, the main Shanghai nickel contract 2403 was priced at 129770 yuan/ton, an increase of 1.94%.
In addition, LME London nickel has also recorded a significant increase in the past week, closing at a bullish candlestick for five consecutive trading days around the $16210/ton price, with a 21 day increase of up to 2%.
Compiled by Wenhua Finance and Economics Association
Market news shows that multiple supply factors are affecting nickel prices. On the one hand, the US's intention to sanction Russia has raised concerns about the supply of aluminum and nickel. On the other hand, due to low nickel prices, BHP Billiton is considering closing its nickel business in Australia.
BHP Billiton is considering closing its nickel business in Western Australia
On Thursday, BHP announced that it is considering closing its Western Australian nickel business due to a significant drop in nickel prices. This decision will have a profound impact on the company and may reshape the global nickel market.
BHP Billiton stated that it is currently considering maintenance and upkeep of Nickel West and expects its beneficiation plant in Kambalda to enter the maintenance and upkeep phase starting in June. In addition, the company is also evaluating the development phase and capital expenditures of the West Musgrave project to determine future strategic directions.
Previously, nickel prices in 2023 fell by over 40% due to a surge in Indonesian supply, which also led to the restructuring of nickel mines across Australia.
"For Western Australian Nickel, this is an uncertain moment and we are taking action to address the current market conditions. The company is reducing operating costs for Western Australian Nickel and reviewing capital plans for both Western Nickel and Western Masgrave," said Mike Henry, CEO of BHP Billiton in a statement
Changjiang Nonferrous Metals Network pointed out in a statement that BHP's decision will have a significant impact on the global nickel market. As one of the world's leading mining companies, BHP Billiton's exit may lead to a decrease in nickel supply, thereby affecting market prices. Meanwhile, this decision may also trigger other mining companies to reassess and adjust their own businesses.
The United States will announce significant sanctions against Russia on Friday
On the other hand, Russia is one of the world's largest suppliers of nickel and aluminum, and recently, US President Biden publicly announced plans to announce significant sanctions against Russia on Friday, which has also raised market concerns about the supply of Russian nickel.
According to media reports, White House National Security Advisor Jack Sullivan stated that the latest sanctions against Russia will target a range of industries, including the country's defense and industrial bases, as well as sources of economic income.
After Biden issued the latest warning, aluminum prices on the LME London Metal Exchange rose by 1.8% and nickel prices rose by 1.3%. Currently, in terms of production, Russia's nickel and aluminum production ranks among the top in the global total production.
According to a previous report by Caixin, traders have been monitoring potential new restrictions imposed by the United States on Russian metals after the UK took action in December last year to prevent individuals and entities from trading physical metals such as aluminum, copper, and nickel from Russia. At that time, the UK also hinted at the possibility of coordinating actions with international partners. Prior to this, Russian metals had not been widely sanctioned.
Hongye Futures Review stated that LME exchange inventory has reached a new high since 2022. According to the latest data from the World Nickel Research Group, as of November 2023, there was a global nickel oversupply of 212500 tons; The price is greatly affected by market sentiment, and the EU's launch of a subsidy investigation for new energy batteries is clearly targeting China. The unfriendly actions on the periphery have brought significant uncertainty to the market. Currently, prices are in a wide range of fluctuations, with a significant increase in supply.
In addition, Hongye Futures pointed out that Indonesia's nickel iron and nickel salt are expected to grow by 5% -10% in 2024, with significant pressure on prices in the short to medium term. The exchange has absorbed a large number of warehouse receipts to partially alleviate the pressure on the spot market. At the same time, there are reports that Australia will close a nickel mine due to the continuous decline in nickel prices. At this moment, the market is easily controlled by panic and will reopen after a long holiday, with a cautious market mentality; At present, it is recommended to engage in short-term trading and buy on dips before the overall supply and consumption data improves.