On March 1, Qingshan industry signed a high nickel matte supply agreement with Huayou cobalt Co., Ltd. and Zhongwei Co., Ltd. in October 2021, Qingshan industry will supply 60000 tons of high nickel matte to Huayou cobalt Co., Ltd. and 40000 tons of high nickel matte to Zhongwei Co., Ltd. respectively, with a total of 100000 tons of high nickel matte, about 75000 tons of metal tons (about 75% of high nickel matte). The news is believed to have triggered the sharp drop of Shanghai nickel and LME nickel on the evening of March 3. The stainless steel futures market was also greatly affected and the trading limit was closed in the morning of March 4.

 

  First of all, from the perspective of the dual structure of the nickel industry chain, since 2006, domestic stainless steel manufacturers have gradually adopted NPI (nickel containing pig iron) for stainless steel production, and the application proportion of pure nickel in stainless steel production has gradually declined, which is basically replaced by NPI. Currently, pure nickel is only used to adjust the nickel content ratio of raw materials. In recent years, with the development of new energy automobile industry In full swing, the proportion of nickel used in new energy batteries is increasing, and it is estimated that it will account for about 25% ~ 30% of the total nickel consumption in 2030. Therefore, the nickel industry chain is divided into two paths: one is laterite nickel iron stainless steel, the other is nickel sulfide high matte nickel sulfate for battery. In the third quarter of 2020, with the gradual recovery of new energy vehicle industry in the world and the shortage of nickel intermediates and other raw materials, the preparation of nickel sulfate mainly uses electrolytic nickel (pure nickel), while the supply of ferronickel is relatively surplus, which makes the nickel price difference between ferronickel and pure nickel larger and larger, reaching 200-300 yuan / nickel point. The production of high nickel matte from laterite nickel ore will undoubtedly open up the connection between the two nickel industry chains and reduce the price difference between ferronickel and pure nickel.

 

  So, what will be the impact on stainless steel futures?

 

  1. In the short term, it will have a big impact on the disk

 

  For a long time, nickel futures market performance has a strong correlation with stainless steel trend. Although the correlation has been weakened due to the wide use of ferronickel in production, it still has a great impact. LME nickel price and Shanghai nickel have been the wind vane in stainless steel spot trade. In the short term, stainless steel futures still have the possibility of a sharp decline under emotional stimulation.

 

  2. Steel mills may take advantage of the opportunity to suppress nickel raw materials

 

  At present, the cost of stainless steel raw materials is relatively high. According to the calculation of 1210 yuan / nickel point for ferronickel and 9000 yuan / ton for ferrochrome, the production cost of stainless steel 304 is about 15400 yuan / ton, which is far higher than the current futures price. In the face of sharp loss of spot profit, steel mills are likely to adopt the strategy of suppressing the cost of raw materials to maintain their own profit margin as far as possible. Specifically, the possibility of cracking down on the price of ferrochrome is relatively low. First, the price of ferrochrome is not directly related to nickel. Second, under the background of the current national power restriction and production capacity reduction, the shortage of ferrochrome supply is difficult to break, and the price is difficult to reduce. More likely, under the stimulation of the fall of nickel price, the price mentality of nickel ore and ferrochrome will be depressed. In addition, the early rise of waste stainless steel is also faster, and the price of waste stainless steel will be reduced by cracking down on waste stainless steel The price of stainless steel has great economic advantage for the production of stainless steel.

  

  3. In the long run, the price of ferronickel will be close to that of pure nickel

 

  From the 100000 tons of high nickel matte orders of Qingshan, Huayou and Zhongwei, the equivalent metal volume is about 75000 tons, accounting for 8.06% of Indonesia's ferronickel production (estimated 930000 tons) in 2021, which has a great impact on the return domestic volume of ferronickel. In addition, as the profit of producing high nickel matte is higher than that of producing Ferronickel, it can not be ruled out that Qingshan will receive more high nickel matte orders in the future The relief of oversupply will benefit the price of ferronickel and provide cost support for the price of stainless steel. The premium of pure nickel to ferronickel will also show a narrowing trend, and the two will be close by the way of pure nickel falling and ferronickel rising.

 

  Generally speaking, nickel price rose greatly in the early stage under the stimulation of good demand for new energy and better macro expectations, while the news of Qingshan ferronickel's conversion to high nickel matte had a greater impact on the short-term market. Pure nickel returned to the fundamentals, while stainless steel had been cashed in the market under the emotional impact, such as the cost decline. If the market continued to fall, there was the possibility of "miscarriage", and the spot price fell by a large margin It will also be smaller than the decline range of futures. After the market stops falling in the range of 13500-13800 and stabilizes, there is a possibility that the basis may be repaired upward.