China’s Nickel Sulphate Prices Rise as Producers Struggle with Mounting Losses

China’s Nickel Sulphate

Chinese nickel sulphate producers increased prices following the Golden Week holiday to offset growing losses, as raw material prices for class 1 nickel and mixed hydroxide precipitate (MHP) rose. On October 10, these producers reported a nearly 2,000 yuan per tonne ($283/t) loss, up from a 500 yuan loss before the holiday, driven by international nickel and MHP price hikes.

Following these losses, producers raised nickel sulphate offers by around 1,000 yuan to reach 27,800-28,200 yuan per tonne on October 11, up from 26,800-27,200 yuan before the holiday. Despite this increase, market activity remains low due to ample inventory and a declining outlook in the electric vehicle (EV) sector, particularly in the fourth quarter.

Limited Demand Despite Supply Adjustments

Nickel sulphate is vital for the production of batteries in the EV industry, which comprises nearly all battery demand in China. However, weak downstream interest has dampened pricing, as cathode active material (CAM) prices, specifically nickel-cobalt-manganese (NCM), have remained stable post-holiday. Many suppliers, seeking to avoid further price drops, are destocking their inventories, further affecting demand.

The country imported 122,272 tonnes of MHP and 68,227 tonnes of nickel matte in August, primarily from Australia, Papua New Guinea, Indonesia, and New Caledonia. While many sulphate producers continued output to retain market share, low profitability has forced others to delay new projects, including planned expansions in Guangxi and Guizhou.

Recent data from the China Automotive Battery Innovation Alliance show that newly installed power-battery volumes rose by 33% year-on-year to 292.1GWh from January to August. However, nickel sulphate output held steady at around 380,000 tonnes, indicating that destocking and overstocking issues from previous years continue to impact the industry. "We aren’t seeing significant demand growth due to ongoing destocking efforts after EV producers overestimated their needs in 2021-22," noted an NCM CAM producer.