Chinese Nickel Sulphate Producers Raise Prices to Offset Rising Losses

To combat mounting losses, Chinese nickel sulphate producers increased their prices after the Golden Week holiday. By October 10, producers faced a loss of nearly 2,000 yuan ($283) per tonne, a sharp rise from the 500 yuan loss prior to the holiday. This increase in losses follows a surge in raw material costs, including class 1 nickel and mixed hydroxide precipitate (MHP), which are key to nickel sulphate production.

Market Conditions Continue to Weaken Despite Price Hikes

On October 11, producers raised nickel sulphate prices by about 1,000 yuan per tonne, bringing the price range to 27,800 to 28,200 yuan per tonne. However, despite the price increase, market activity has been sluggish. High inventory levels and declining demand in the electric vehicle (EV) sector hinder market recovery. Weak demand from EV manufacturers, which account for the bulk of nickel sulphate use in China, continues to put pressure on producers.

Weak Demand from the EV Sector and Growing Supply Challenges

Nickel sulphate plays a crucial role in EV battery production. Despite a 33% year-on-year increase in installed power battery volumes (292.1 GWh from January to August), demand for nickel sulphate remains low. The prices of cathode active materials (NCM), essential for EV batteries, stabilized post-holiday without spurring increased demand for nickel sulphate. To manage the surplus, suppliers are focused on destocking, further adding to the market’s weak demand.

Imports and Production Delays Amid Rising Costs

China imported large volumes of MHP and nickel matte in August, with 122,272 tonnes of MHP and 68,227 tonnes of nickel matte arriving from key suppliers such as Australia, Papua New Guinea, and Indonesia. Despite maintaining production levels to secure market share, low profitability has forced some producers to delay planned expansions and new projects, particularly in key regions like Guangxi and Guizhou.

As a result, although China’s automotive battery industry continues to grow, nickel sulphate output struggles to meet the increasing demand for EV batteries. The challenges producers face highlight the complexity of balancing supply and demand in an uncertain market.