Nickel prices gradually weakened after an initial rise in January, generally trading within a high range. As several Chinese producers that had cut output in Q4 2025 significantly ramped up production in January, coupled with continued arrivals of overseas material and relatively lower-priced Indonesian-origin resources, the spot supply of refined nickel in the Chinese market was ample overall. Against this backdrop, downstream buyers showed low willingness to build inventories, which resulted in subdued spot trading for refined nickel during the first and middle parts of the month. Entering the month-end, the monthly spread on SHFE nickel widened. Some small and medium-sized traders, after rolling their positions, offered material at lower premiums/discounts and entered an early holiday mode. Market transactions were dominated by lower-priced resources, making it difficult to conclude deals at conventional price levels. Transactions mostly revolved around previous orders and long-term contract pricing, and the activity of spot trading was gradually weakening.
Nickel prices fell sharply in early February, and this stimulated some downstream consumers to purchase on the dip, which briefly warmed trading activity. However, as the Chinese New Year holiday approached and logistics gradually halted, the market entered a quiet state of weak supply and demand. Spot premiums/discounts for refined nickel moved higher overall. With the influence of financial factors gradually diminishing, nickel prices are expected to continue fluctuating around the holiday.
Source: Mysteel
In January 2026, China's refined nickel production reached 35,225 tonnes, representing a month-on-month increase of 14.34% and a year-on-year increase of 4.91%. The current installed capacity of Chinese refined nickel producers stands at 48,599 tonnes, with operating capacity at 47,149 tonnes, resulting in an operating rate of 97.02% and a capacity utilization rate of 72.48%.
In the fourth quarter of last year, some refined nickel producers focused on the new energy battery sector and reduced output due to tight intermediate feedstock supply. Other enterprises also experienced varying degrees of production cuts or shutdowns owing to declining profits, increased sales of nickel sulfate, and insufficient recycled materials. Since the beginning of this year, with rising nickel prices, improved raw material supply, and the launch of new annual production plans, the production at some companies has begun to recover.
Looking ahead to February, although large and medium-sized enterprises in China will maintain production during the Chinese New Year holiday. Production is therefore projected to decline slightly to 32,260 tonnes, down 8.42% month-on-month and 2.68% year-on-year.
Source: Mysteel
In 2026, Jinchuan increased its market offerings. However, due to persistent shortages since Q4 2025, robust downstream demand, and the transportation time required from Jinchang to major consumption hubs in China, spot supply remained tight at the beginning of the month, keeping spot premiums elevated. This tightness gradually eased entering the middle and latter part of the month. Yet, as traders generally opted to actively manage their base inventory levels ahead of the Chinese New Year, the linkage between spot prices and the official ex-factory price strengthened further.
Regarding imported material, spot Norwegian nickel remained in short supply, with premiums staying high. Driven by the tight supply of Jinchuan cathode, some downstream consumers switched to Sumitomo resources as an alternative, leading to accelerated depletion of its spot availability and a significant rise in its premiums. By month-end, spot Sumitomo material became difficult to source. During the month, some Indonesian-origin Dingxing and Yongheng brand refined nickel also flowed into the Chinese market. NORNICKEL nickel arrivals were frequent, significantly alleviating previous shortages and leading to a substantial correction in its spot premiums.
Nickel briquettes emerged from a prolonged period of scarcity, with a small amount of spot material circulating in the market. Against the backdrop of a persistently import arbitrage chance, their premiums fell notably compared to earlier periods, but their cost-effectiveness still lagged behind mainstream electrowinning nickel plates. Coupled with unstable supply, some downstream consumers that previously used nickel briquettes gradually shifted to nickel plate production, which resulted in an overall slow digestion rate. Additionally, Hanrui nickel plates, which commenced production in Q4 last year but were withheld from the market due to price considerations, began sales in January this year.
Looking ahead post-holiday, while large and medium-sized Chinese enterprises generally maintained production during the Chinese New Year, sales pressure is expected to increase after the holiday. Jinchuan resources are projected to remain tight in the first week post-holiday. After approximately a four-day transportation cycle, the spot availability in East China markets is expected to gradually become sufficient, potentially leading to a retreat in spot premiums. Domestic electrowinning nickel brands like Huayou and GEM are expected to have ample spot supply, with limited fluctuations in their premiums/discounts anticipated. Arrivals for both Norwegian and Sumitomo resources are scheduled for early March. However, given currently low market inventories, their premiums are expected to remain relatively high in the short term following the holiday.
Written by Cora Ji, jiruyan@mysteel.com
