Due to the disturbance of the situation in Russia and Ukraine, on March 7, the nickel price appeared as one of the most extreme price movements in the history of the London Metal Exchange (LME). Nickel reached a record high of US $381 / ton, up nearly US $381 / ton. It rose more than $21000 a day, also the largest one-day increase in the 35 year history of the contract.

Russian nickel accounts for about 11% of the global output, second only to Indonesia and the Philippines. Norilsk Nickel is the largest nickel producer in the world. Russia actually supplies about 10% of the global demand for nickel, which is mainly used to manufacture stainless steel and electric vehicle batteries. The United States and European allies explored the idea of banning the import of Russian oil, which also made the metal market nervous and promoted the overall rise of the market.

The most important driving force remains geopolitical:

On the one hand, the expectation that the sanctions against Russia will lead to the tightening of international crude oil supply will heat up the whole commodity market from the energy cost side; On the other hand, for nickel, the markets concern about Russian nickel supply provides the main support for the rise of nickel price; LME nickel inventory fell 3006 tons to 77082 tons last week.

At present, the market expects that if the United States upgrades its sanctions against Russia, the Russian nickel plates originally flowing to Europe and the United States may turn to countries or regions outside Europe and the United States, especially China.

Shanghai Nonferrous Metals pointed out that the short-term supply tension of pure nickel in Europe and the United States is expected to be higher than that in China. The two possibilities speculated by the agency are:

First, the most likely flow direction of Russian nickel is to enter LME warehouse or China. If entering the LME warehouse, the LME warehouse will accumulate significantly in the short term. Because of the shortage of spot imports from Russia, LME entered the domestic warehouse, forcing the spot imports from China to rise, and LME suffered too much losses.

Second, in the case of significant import losses, the domestic spot is tight, the spot premium rises, and the import window opens. In either case, the amount of Russian nickel entering China is bound to increase.

Even so, under the internal and external price linkage mechanism, the short-term sharp rise of lunni is also raising the overall price level. In the early stage, the nickel price has been in an upward trend, but the rise is accelerated due to the influence of Russian nickel in the short term. In addition, the current global nickel inventory is at a historical low, which stimulates the rapid rise of Lun nickel price.

The data show that the overall inventory of lunni is only more than 70000 tons at present, and the inventory level is about 260000 tons in the same period of 2021. Since last year, lunnis inventory has always been in a slow decline state, "At the end of 2019, lunnis inventory reached a low of 60000 tons, but then it rebounded rapidly. Recently, lunni and Shanghai nickel markets are in an upward state of increasing positions, coupled with strong fundamental support factors, nickel prices will remain strong in the short term.

On the morning of March 8, a large inventory merchant significantly raised the price of stainless steel seamless pipe by 3500 yuan / ton, an increase of 15%, reaching a new high in 14 years. Another large merchant rose 3200 yuan / ton. next. The huge increase will deter buyers. Unless they have to purchase products, the market demand is bound to freeze in the short term.

In the face of such an irrational market moment, more pipe merchants choose to wait and see at this time. They feel that the sharp rise seems irrational. Closing the plate and watching its change can only be a choice they have to make.