In the past two trading days, the stainless steel market hyped the production reduction theme of a steel plant, and the linkage Shanghai nickel continued to rise sharply. As of the closing on the afternoon of October 11, the main contract of stainless steel had reached a new high in nearly one and a half months, and Shanghai nickel had touched above 160000 yuan / ton for the first time since October 21, 2021.
The analysis shows that the supply side benefit is the main reason to ignite the bull sentiment in the stainless steel and Shanghai nickel market. However, in the face of the off-season demand for stainless steel and the nickel price, which is already at an absolute high level, the driving force for further rise is not strong.
According to Mysteel, if the market rumors of “production reduction of a cold rolling plant in Shandong” are true, it will have a great impact on the delivery of stainless steel warehouse receipts. In addition, since December 2021, some stainless steel plants have successively announced maintenance and production reduction due to narrow profits, which is expected to continue until February 2022, which makes the stainless steel production expected to decline in January and February.
The problem of supply contraction also exists in the nickel market. According to Yide futures, the nickel industry chain has been optimistic since 2021: Overseas inventories have continued to decline, from the high of 260000 tons at the beginning of the year to about 100000 tons at present; Chinese inventories also continued to decline. In 2021, this state of low inventory and low warehouse receipt continued to go to the warehouse at the same time, and the phenomenon of “warehouse squeeze” once occurred.
London metal exchange data on the 11th showed that when Tianlun nickel inventory decreased by 210 tons to 99744 tons, the total inventory was lower than 100000 tons for the second consecutive day.
However, at present, the stainless steel market has turned into the off-season, and the price rise in the past two days not only suppresses the downstream demand, but also stimulates the improvement of production profits and the increase of supply. According to Mysteel, the actual transaction of spot stainless steel on the 11th was limited, the overall downstream demand was weak, and the transaction performance was relatively flat. In addition, from the supply side, the output of a steel plant in East China in January increased by 15000 tons compared with the beginning of the month, all of which are 200 series stainless steel. It is estimated that in January 2022, the output of 200 series crude steel of 32 stainless steel plants in China will be 582400 tons, an increase of 2.64% over the output scheduled at the beginning of the month.
Overall, China Securities Co.Ltd(601066) futures analysis believes that tight supply is the main reason for pushing up nickel prices; The disk of stainless steel futures is stronger, but the increase in spot is small. On the one hand, the rise in stainless steel price is driven by the cost brought by the rise in electrolytic nickel price. On the other hand, the increase in maintenance and production reduction of steel plants in January will reduce the supply of stainless steel. Driven by dual factors, the increase in stainless steel is more significant. The short-term tight supply still supports the nickel price, but the current nickel price has been at a high level, and the upward momentum is limited; Stainless steel inventory has stabilized and rebounded, the demand in the off-season is weak, and the supply is reduced slightly, or it is difficult to form a sustained driving force.
Yide futures also said that there is a high probability that nickel and stainless steel will remain strong before the delivery of 01 contract. But in the long run, the market is still dominated by supply and demand. “In the face of the soaring market, investors are advised not to chase up.”
(source: Xinhua Finance and Economics)
