China’s Nickel Sulphate Prices Rise Amid Producer Losses

Producers Adjust Prices to Counter Rising Losses

In a significant response to increasing financial pressures, Chinese nickel sulphate producers have raised their prices following the Golden Week holiday. As of October 10, the average loss reported by producers surged to nearly 2,000 yuan per tonne (approximately $283), a substantial jump from the 500 yuan loss experienced before the holiday. This drastic increase in losses is primarily driven by rising raw material costs for class 1 nickel and mixed hydroxide precipitate (MHP), which have been climbing on the international market.

To combat these mounting losses, producers raised their nickel sulphate prices by approximately 1,000 yuan per tonne. By October 11, the new price range for nickel sulphate reached between 27,800 and 28,200 yuan per tonne, compared to the previous range of 26,800 to 27,200 yuan. Despite this upward price adjustment, market activity has remained low, hindered by ample inventory levels and a declining outlook in the electric vehicle (EV) sector as the fourth quarter approaches. The overall uncertainty in the market has led to diminished demand, complicating the situation for producers.

Weak Demand and Market Conditions

Nickel sulphate plays a crucial role in battery production for the EV industry, which accounts for nearly all battery demand in China. However, recent trends indicate weak downstream interest in nickel sulphate, which has negatively impacted pricing. The prices of cathode active materials (CAM), particularly nickel-cobalt-manganese (NCM), have stabilized post-holiday, failing to drive up demand for nickel sulphate. As a result, many suppliers are focusing on destocking their inventories to avoid further price reductions, exacerbating the overall demand challenges within the sector.

Import Trends and Production Challenges

In August, China imported substantial quantities of MHP and nickel matte, with figures showing 122,272 tonnes of MHP and 68,227 tonnes of nickel matte being brought in, primarily from countries such as Australia, Papua New Guinea, Indonesia, and New Caledonia. While many nickel sulphate producers have continued to maintain their output levels to preserve market share, the low profitability situation has forced some to postpone new projects, including planned expansions in key regions like Guangxi and Guizhou.

Recent data from the China Automotive Battery Innovation Alliance reveals that newly installed power battery volumes rose by an impressive 33% year-on-year, reaching 292.1 GWh from January to August. However, nickel sulphate output has remained steady at around 380,000 tonnes, indicating that ongoing destocking and overstocking issues from previous years continue to impact the market dynamics.