Whether the LME nickel futures price after the three limit falls in place? Has the injured industrial chain recovered? What are the factors affecting the future market of nickel price With the mitigation of close position risk and the correction of LME nickel price, this series of problems have become the new focus of the market.
After the resumption of trading of LME3 month nickel futures, it encountered three consecutive limit falls, and the latest quotation was $3691500 / ton. The main contract of Shanghai nickel futures came out of the relatively independent narrow range shock market and closed at 21.852 yuan / ton on the night of March 18.
According to the analysis of many people in the futures industry to the first financial reporter, LME nickel futures continued to fall after the resumption of trading, but the internal and external price difference is still large, and there is still room for decline in the follow-up. Shanghai nickel can better reflect the supply and demand fundamentals of nickel compared with LME nickel price. In the future, LME nickel price and Shanghai nickel price difference will return to normal in reverse trading, and LME nickel price will probably be close to Shanghai nickel.
After the nickel price recovers to be stable, the supply-demand relationship will again dominate the price trend of nickel. Interviewees believe that at the supply and demand level, the future needs to pay attention to the supply of Russian nickel under the situation in Ukraine, whether the output of high matte nickel is large, whether the Fed’s interest rate increase will cool the speculative buying of global new energy metals, and whether the battery loading of new energy vehicles under high nickel prices will be affected.
What is the current situation of the injured industrial chain under the high nickel price? Industry insiders said that at present, the industry has recovered slightly, and China’s spot is traded according to Shanghai nickel pricing. However, due to the high price of Shanghai nickel, the downstream willingness to receive goods is low, and the degree of market recovery is limited. The import and export of nickel is still at a standstill, and it is difficult for relevant enterprises to hedge, but in the long run, the hedging function of futures derivatives will still be an important part in the development of enterprises.
internal and external price difference still needs to be repaired
On March 18, LME3 three-month nickel futures still fell by the limit at the opening, which was the third limit recorded after it resumed trading on March 16. The latest announcement of the London Metal Exchange (LME) said that from March 21, the limit on the rise and fall of nickel futures contracts increased from 12% to 15%.
“The continuous decline of LME nickel limit may have a lot to do with the strengthening of supervision by LME and the return of nickel price to the fundamentals of supply and demand. Of course, it also has something to do with the panic selling of bulls in the LME market. In the short term, LME nickel price returns to 3691500 US dollars / ton, which still has a certain gap with the reasonable price we analyzed through the fundamentals of supply and demand. The reasonable price of nickel futures in LME3 months should be 30000 US dollars or less, and there is still room for decline in the future.” Cheng Xiaoyong, director of Baocheng futures Finance Research Institute, told the first financial reporter.
Gu Fengda, head of Guoxin futures research and consulting department, also said that after the resumption of LME nickel futures trading, there may be four consecutive boards after the three consecutive boards. The reason is that the market supervision pressure has been quite different from that in early March after the short-term short-term position squeeze and surge out of the fundamentals by taking advantage of the capital advantage has been suspended by various measures, At the same time, the so-called “silver mountain will not be afraid of the decline of the main force under the regulation of peace and space”, and the main force of the so-called “silver mountain will not be afraid of the decline of the main force” will not be able to catch up with the decline of the rules. At the same time, the so-called “silver mountain will not be afraid of the decline of the main force under the regulation of peace and space”.
Shanghai nickel futures have fluctuated in a narrow range recently. During the night trading period from March 16 to March 18, the cumulative slight decline was 0.46%. Among them, on March 18, the main contract of Shanghai nickel futures fell 0.63% to close at 21.852 yuan / ton.
“At present, the price of Shanghai nickel is around 220000 yuan / ton, while it is about 270000 yuan / ton converted into the Chinese price according to the LME nickel price, and the internal and external price difference is still huge. If the Shanghai nickel price is a reasonable price level, the LME nickel price may have a falling limit, so as to return to the normal state.” China Securities Co.Ltd(601066) futures metal analyst Wang Yanqing told the first financial reporter.
According to Wang Yanqing, the commodities corresponding to Shanghai nickel and LME nickel are the same commodity. If there is a large price difference, there will be arbitrage opportunities. Therefore, the prices of Shanghai nickel and LME nickel are usually in a linkage state. From the current state, LME nickel is moving closer to Shanghai nickel.
Cheng Xiaoyong believes that Shanghai nickel can better reflect the supply and demand fundamentals of nickel than LME nickel price. Its price discovery and risk hedging functions play a better role, and its LME nickel price returns to rationality in advance. From the perspective of future trend, the price difference between LME nickel price and Shanghai nickel price will return to normal in reverse trading in the future. The approximate rate of LME nickel price is close to Shanghai nickel, which guides LME nickel price to restore the market pricing function. After the LME nickel closing event, the authority of LME market, as a large player market, in the spot market will decline, and Shanghai nickel will improve its pricing power in global nickel.
industrial level, whether to resume operation
This round of irrational nickel price has a great negative impact on market liquidity, industrial customers, arbitrage and retail investors.
Among them, at the industrial level, on March 15, Chen ruiruirui, the nickel cobalt lithium Project Department of Beijing Antaike Information Co., Ltd., said that in the electrolytic nickel spot market, the transaction was stagnant and the inventory was accumulated; The stainless steel industry chain is deadlocked, and there is no transaction in the market; Battery material industry, a small amount of quotation, no transaction, downstream orders are suspended, and the existing orders are still in normal performance; Electroplating, alloy and other fields, stop production, reduce production, do not purchase or receive orders.
With the continuous decline of LME nickel price, has the nickel industry resumed operation or is it still in a wait-and-see state?
“At present, the industry has recovered slightly, and China’s spot is traded according to Shanghai nickel pricing. However, due to the high price of Shanghai nickel, the willingness of downstream receiving goods is low, and the degree of market recovery is limited. The import and export of nickel is still stagnant, and there is still a lack of pricing benchmark for international trade.” Wang Yanqing told the first financial reporter.
Cheng Xiaoyong also said that import and export nickel enterprises or enterprises relying on LME nickel point price have not resumed operation. On the one hand, enterprises cannot use LME nickel price hedging due to the continuous falling limit of LME nickel. The falling limit means that they cannot flexibly adjust the hedging position and return the current price difference in the short term; On the other hand, in the case of falling limit, nickel enterprises can not use LME nickel to point the price, because it is impossible to determine the discount standard for the increase and decrease of the benchmark price of LME nickel futures. In this case, some enterprises consider using Shanghai nickel to hedge or price, and most of them are still in a wait-and-see state, especially Chinese enterprises whose customers involve overseas enterprises.
“I think the short-term decline of LME nickel price is a little too fast, which also has a certain impact on the market liquidity and stability. After all, the continuous decline limit makes it difficult for the enterprise hedging business to operate, which affects the spot enterprises to point the price according to the LME nickel futures price, slow down and return to a reasonable price. It should be a better way.” Cheng Xiaoyong added.
Gu Fengda also believes that from the perspective of the development of the industrial chain outside China, with the promotion of the repair of the price difference in the nickel market outside China, the overall sharp correction of LME nickel is in line with the long-term fundamentals of the nickel industrial chain and the mainstream expectations of the market.
\u3000\u3000 “Although in the short term, the LME nickel storm and the spillover of negative effects have impacted the real industry, in the long term, the hedging function of futures derivatives will still be an important part of the development process of enterprises. In particular, the pricing of futures market has become the most important benchmark for the pricing of major commodity trade in the world and will be extended to more and more industry enterprises. As a single event, the LME nickel storm will not affect the profits of the real industry The general trend of using financial instruments to participate in risk management.
”Gu Fengda told the first financial reporter.
future influencing factors
The irrational market of nickel price since March 7 is mainly affected by factors such as the position pressing event and the situation in Ukraine. Has the risk of LME nickel position pressing been lifted now, and what factors need to be paid attention to in the future market?
\u3000\u3000 “Judging from the three limit declines, we believe that the long position squeeze of overseas LME nickel has basically ended. In the future, part of Castle Peak’s hedging position will be ended by reducing positions, and part of Castle Peak’s electrolytic nickel replaced by high matte nickel will realize delivery and closing positions. If Castle Peak can replace all the cargo delivery positions, Castle Peak will survive the hedging with no risk. At most, the revenue growth caused by the rise of nickel price is offset by the book loss of hedged futures. ”Cheng Xiaoyong said.
In Cheng Xiaoyong’s view, there may be three problems to be solved in the follow-up of the position closing event: first, at which price does Castle Peak close its position? If the position is closed at a high level, the current period cannot be hedged, there are many invalid hedging parts, and the enterprise faces large losses; Second, how to settle the over-the-counter derivatives held by Castle Peak through JPMorgan Chase and other institutions. Generally, the over-the-counter derivatives are attached with more additional conditions or over leveraged. If the over-the-counter derivatives are not solved well, it will also lead to sharp fluctuations in LME nickel futures; Third, the pricing function of LME nickel futures has been impacted in this closing event. China needs to strengthen the pace of nickel pricing power, otherwise Chinese enterprises will face the risk of overseas capital hunting in overseas hedging.
For short-term investment suggestions, Gu Fengda believes that investors need to pay attention to the risk of killing and falling after short-term reversal. However, in combination with the price comparison of foreign markets in China, it is unlikely that LME nickel will return to the price level in early February in one step. Avoid excessive panic and look at the future market rationally. Institutional and industrial investors can focus more on the return of price difference and the anti arbitrage opportunity of the return of strength outside the price comparison and weakness inside the price comparison.
With the gradual return of nickel price to reasonable price, what factors will affect the interpretation of nickel price in the future?
Wang Yanqing believes that after the nickel price returns to stability, the relationship between supply and demand will again dominate the price trend of nickel. Russian nickel supply can be said to be the most important uncertain factor in the balance of nickel supply and demand this year. Therefore, we need to continue to pay attention to the situation in Ukraine and whether western countries may relax sanctions against Russia. In addition, if Russian nickel can enter China smoothly, the fear of nickel supply shortage in China will be dispelled, which will bring pressure to China’s nickel price.
“According to our calculation, the global nickel supply gap is only 46000 tons in 2021, and may expand to about 50000 ~ 60000 tons in the first half of 2022. In the second half of the year, with the formation of high matte nickel output and the recovery of nickel pig iron output, the global nickel element will return to a slight surplus. The sharp rise of nickel price is mainly due to structural tension, that is, the insufficient supply of electrolytic nickel and nickel sulfate, not the insufficient supply of the whole nickel element.” Cheng Xiaoyong said.
Cheng Xiaoyong believes that the follow-up nickel price needs several factors: first, pay attention to whether the output of high matte nickel is in large quantity. If it cannot be in large quantity, there is still a gap in the supply of electrolytic nickel and the nickel price will rise; Second, in the case of rising raw material prices and declining subsidies, will the loading volume of new energy vehicle batteries be affected, especially the loading volume of ternary lithium batteries; Third, will the high nickel price affect the substitution of ternary lithium battery and lithium iron phosphate battery? For example, Byd Company Limited(002594) has been vigorously developing lithium iron phosphate battery; Fourth, will the Fed’s interest rate hike cool the speculative buying of global new energy metals.
