2022 nickel annual report "nickel: may be "demon" as before the release of a few days, did not intend to break this variety, helpless nickel performance is too dazzling, last night LME nickel soared 4.94%, closed at 23170 US dollars / ton, a new high of 10 years, Shanghai nickel index performance and Lun nickel on par with the night up 4.85%, stand on 170,000 yuan / ton, the market is so hot, then talk about nickel with friends again, mainly to explore two questions, what is the logic of nickel price surge? Nickel prices have risen sharply, what is the follow-up strategy?
Key conclusions:
2, macro pressure is not much: the performance of nickel in the previous Fed interest rate hike cycle is not bad.
3, the shortage of status: inventory and premium is the most direct indicator reflecting the degree of spot shortage, from the nickel inventory and premium point of view, nickel supply and demand status is extremely scarce, such a state of shorts are basically no goods to deliver, long run is an important factor to push up nickel prices.
4, Indonesia production uncertainty: occupy the resource advantage, but low-grade nickel development, high energy consumption, high pollution, and most of the profits remain in the NPI industry link, Indonesia has the demand to enhance the value of nickel resources, may levy nickel ferron and nickel pig iron export tariffs is just the beginning, behind the nickel industry profit redistribution, enhance the value of nickel resources of the appeal, the later stage does not rule out that there will be another policy to restrict the development of low-grade nickel, in this context whether there is a certain interference in the smooth production, the pressure of Indonesian supply is still expected.
5, nickel bean molten nickel sulfate profit is not resistance: reflects the nickel sulfate and precursor production capacity matching relationship, can not reflect the new energy demand problems, can not form a nickel price rise resistance.
6, supply and demand is fundamental: supply and demand is the most fundamental thing to judge the price of commodities, many times the price difference, intermediate profit, etc. will appear in the supply and demand contradiction intensified when the extreme value, these are the results, with the result of the judgment of the results is easy to misjudge, these spreads and profits of the abnormal state, is not the reason to hinder the continued progress of the market.
7. About the strategy:
1) Annual report view: nickel excess mainly occurs in the second half of the year, the global inventory level is low, the first half of the year is based on the idea of doing more on dips, after the second quarter, if the Indonesian policy is stable and smoothly put into production, the first half of the year is a time to rush higher.
2), about the current: nickel prices have a considerable increase, it is expected that the market volatility has intensified, chasing more has a certain risk, the later stage of the high probability into the capital game stage, the later stage may still have a high point, more than a single can still be cautiously held, there is no more than a single and want to fight, you can consider the imaginary value of the call option, the risk is limited, if the price continues to rush higher, or there is a certain return.
3), inter-period strategy: based on the current situation of low inventory, and the surplus in the first half of the year is not much, pay attention to the LME nickel borrow opportunity, domestic inter-period positive set.
4), cross-market strategy: after the supply of wet intermediates and high ice nickel mass production, nickel sulfate demand for electric nickel (nickel beans) may decline, and import demand is expected to decline in the second half of the year.
Our views and logic on nickel prices will not be repeated here, and friends can refer to the 2022 nickel annual report "Nickel: May be "demon".
Today to talk about the logic of nickel inflation from another angle, we discuss from the mainstream bear logic as an entry point, if the bear logic can not become the resistance of the current market, then the market runs in the direction of the least resistance.
The main bearish logic is roughly two aspects, one is the pressure of the Fed's monetary policy contraction; the other is the supply pressure of the Indonesian nickel element to be put into production; if you add another one, it may not be considered a bear logic, which is a factor that hinders the rise in nickel prices - the processing profit of nickel beans fused nickel sulfate is low. We will explore each of these three aspects:
Let's start with the first question, the pressure of the Fed's monetary contraction. U.S. employment is gradually improving, inflationary pressures are highlighted, the Federal Reserve Taper has accelerated, and the next face is the pressure of interest rate hikes and balance sheet reductions, does the interest rate hike mean that nickel prices have fallen? The answer is no.
1 Nickel prices have not performed badly in previous Fed rate hikes
As shown in the chart above, we compared the federal funds rate with the nickel price, and found that from the 1987 period to the present, the Fed has had five significant interest rate hikes, and from the above table, we can see that the performance of nickel in the previous Fed rate hike cycles is not bad. In fact, it is not difficult to understand that the process of interest rate hikes is generally in the stage of better economic performance or economic overheating, and the supply and demand performance of commodities in the stage of interest rate hikes is generally not too bad.
In fact, not only nickel has such a law, other non-ferrous metals such as copper, aluminum, and CRB indexes have performed well in the Fed's interest rate hike cycle.
2
Regarding the supply pressure of nickel element production in Indonesia - the current situation of abnormal shortage, there is policy interference whether it is successfully put into production
If Indonesia's nickel project is put into operation as planned, there is indeed a lot of pressure, but according to the quarterly split, even if it is successfully put into production, excess pressure mainly occurs in the second half of the year, and the current status quo is - lack.
1, the current situation of abnormal shortage - domestic and foreign inventories continue to decline, the premium has risen sharply, and bullish squeezing is an important factor in pushing up nickel prices
Inventory and premium is the most direct indicator of the degree of spot shortage, as can be seen in the above figure, LME and domestic inventories are in a continuous decline, LME inventory is less than 100,000 tons, LME nickel 0-3 liters of premium soared sharply, domestic spot inventory has been less than 10,000 tons, Russian nickel premium continues to rise. From the perspective of nickel inventory and premium, the supply and demand status of nickel is extremely tight, and the shorts in such a state are basically out of stock, and the bullish run is an important factor in pushing up the price of nickel.
2. There is policy interference in whether Indonesia is successfully put into production - it is proposed to impose NPI and FENI export tariffs
On January 12, 2022, foreign media reported that the Indonesian government may start imposing export tariffs on nickel iron and nickel pig iron in 2022. This is not the first time that Indonesia has proposed to limit ferronickel and nickel pig iron, as last year, Indonesia's Ministry of Energy and Mineral Resources (ESDM) proposed to restrict the construction of Class 2 nickel smelters, namely nickel iron (FeNi) and nickel pig iron (NPI).
In fact, there is a great inevitability behind this, the current Indonesia is already the world's largest nickel supplier, if Indonesia's nickel production capacity is put into production as planned, Indonesia's nickel supply will gradually increase, even close to half of the global supply, in addition, with the sharp increase in development volume, Indonesia's nickel mine storage and production ratio will decline sharply. Occupy the resource advantage, but low-grade nickel development, high energy consumption, high pollution, and most of the profits remained in the NPI industry link, Indonesia has the demand to enhance the value of nickel resources, may levy nickel ferron and nickel pig iron export tariffs is just the beginning, behind the nickel industry profit redistribution, enhance the value of nickel resources of the appeal, the later period does not rule out that there will be another policy to restrict the development of low-grade nickel, in this context whether there is a certain interference in the smooth production, the pressure of Indonesian supply is still expected.
Indonesian Deputy Minister of Mining Investment Septian Hario Seto said that if prices are not controlled, Indonesia's minerals will be quickly depleted, and in order to extend the life of mineral resources, the Indonesian government will impose a progressive export tax on nickel products.
3
The low profit of nickel soybean molten nickel sulfate is not a resistance - it reflects the matching relationship between nickel sulfate and precursor production capacity, and does not reflect the problem of new energy demand
Judging from the production and sales of new energy vehicles and the ternary installed capacity data, the demand growth of nickel for new energy vehicles is undoubtedly beyond expectations, and the strong growth of new energy vehicles is the driving force for the strong increase in nickel demand. According to the reason, the profit of each link should not be bad, but the spot profit performance of nickel beans production of electric nickel is not good, so the poor profit of nickel sulfate during the shock period is interpreted as an important factor restricting the rise in nickel prices, in fact, if you take a step deeper, the poor profit of nickel sulfate is not because of the bad demand for new energy, but the production capacity of nickel sulfate is loose for the precursor, it is understood that some precursor enterprises purchase nickel beans to produce nickel sulfate, resulting in nickel sulfate production capacity relative to the precursor production capacity is relatively abundant, Therefore, the performance of poor profits in the production of nickel sulfate in nickel beans.
Supply and demand is the most fundamental thing to judge the price of commodities, many times the price difference, intermediate profit, etc. will appear in the supply and demand contradiction intensified when the extreme value, these are the results, with the result of judging the result is easy to misjudge, these spreads and profits of the abnormal state, is not the reason to hinder the continued progress of the market.
Finally, let's talk about the strategy for nickel:
4 Strategy discussion
1, the annual report point of view: nickel excess mainly occurs in the second half of the year, the global inventory level is low, the first half of the year to do more ideas, after the second quarter if the Indonesian policy is stable, smooth production, the first half of the year is high is the timing of the air.
2, about the current: nickel price has a considerable increase, it is expected that the market volatility has intensified, chasing more has a certain risk, the later stage of the high probability into the capital game stage, the later stage may still have a high point, more than a single can still be cautiously held, there is no more than a single and want to fight, you can consider the imaginary value of the call option, the risk is limited, if the price continues to rush higher, or there is a certain return.
3, inter-period strategy: based on the low inventory status quo, and the first half of the year is not much excess, pay attention to the LME nickel borrow opportunity, domestic inter-period positive set.
4, cross-market strategy: after the supply of wet intermediates and high ice nickel mass production, nickel sulfate demand for electric nickel (nickel beans) may decline, import demand is expected to decline in the second half of the year, pay attention to cross-market positive set opportunities.
This article is based on the Chaos Tiancheng Study