As the Chinese New Year approaches, the nickel sulfate market has experienced weak trading activity, as most companies have already completed their stocking, leaving only a few downstream enterprises with remaining procurement needs. Due to the profits staying in the negative, the nickel sulfate producers have been reducing the production while holding the prices firm on low spot inventory. Nevertheless, the limited approval of Indonesia's nickel ore mining quota is expected to restricted the production, making it difficult to meet the demand for 2025. In addition, constantly rebounding LME nickel price has lifted the discount rate of MHP, and tight spot supply is likely to together boost the nickel sulfate prices post the Chinese New Year holiday.
Source: Mysteel
The recent rise in nickel prices strengthened cost support for nickel sulfate, driven primarily by Indonesia's nickel ore quota announcement. On January 10, 2025, Indonesia's Ministry of Mining announced a nickel ore quota of around 200 million wet tonnes for this year, with the possibility of further cuts if miners fail to comply with regulations. Overall, the current quota is unlikely to meet the annual demand for nickel ore. Coupled with Indonesia's clear stance on supporting nickel prices, the recent rebound in nickel prices has strengthened cost support.
Source: Mysteel
On the supply side, China's nickel sulfate production stood at 179,400 tonnes in December, or 39,500 tonnes in Ni. content, up 3.49% month on month (MoM) according to Mysteel survey. Although integrated companies saw a rise in nickel sulfate production in December due to increased demand for ternary precursor exports and higher nickel plate output, the actual supply available for power batteries remained limited.
Source: Mysteel
With the approaching Chinese New Year holiday, many companies have begun suspending the operations, and production is expected to decline further in January. Currently, the inventory of available nickel sulfate products is low, and salt producers are generally unwilling to sell at lower prices and show a strong price-holding sentiment. The tightness in spot supply may push nickel sulfate prices higher.
On the demand end, although some ternary precursor companies actively increased the production to meet annual guidance and overseas ternary precursor inventory was shipped in advance in December, China's actual demand for ternary precursors declined, with limited growth from leading companies. In the ternary cathode materials sector, the demand from the Xiaomi supply chain remained strong in December, and some companies stocked up, which led to a slight increase in production. However, as year-end inventory management tightened at battery manufacturers, the orders for ternary materials declined, and most small to medium-sized companies reduced the production.
Source: Mysteel
It is expected that demand for nickel sulfate in January will be limited due to both the impact of the Chinese New Year holiday and material factories' efforts to destock.
Average Price Trend of Nickel sulfate Before and After the Chinese New Year (2022-2025):
|
Year |
One Week Before the Festival |
First Week After the Festival |
Second Week After the Festival |
|
2022 |
36,500 |
40,000 |
40,000 |
|
2023 |
37,250 |
37,750 |
38,250 |
|
2024 |
25,500 |
26,500 |
27,750 |
|
2025 |
25,750 |
- |
- |
Source: Mysteel
Overall, due to the limited increase in downstream orders, there is little momentum for a significant short-term rise in nickel sulfate prices. It is expected that the margin inversion between nickel sulfate costs and prices will gradually ease after the holiday, potentially leading to price increases for nickel sulfate.
Written by Cora Ji, jiruyan@mysteel.com
