[SMM Nickel Morning Meeting Summary] Ukraine's Military Has Destroyed 12 Russian Oil Tankers, Situation May Escalate; The Most-Traded SHFE Nickel Contract Consolidates at Highs During Morning Trading

7.13 Morning Meeting Minutes

Market Hotspots:

LS-L&F Battery Solution (LLBS) announced that it will officially start commercial production at its precursor plant in Saemangeum, South Korea, in Q4 2026. The company is 55% held by LS Group and 45% by L&F, and has completed construction of a production facility with an annual capacity of 40,000 mt of Ni-Co-Mn (NCM) ternary cathode precursor. Precursor is an intermediate product for cathode materials made from metal raw materials such as nickel, cobalt, and manganese, accounting for roughly 70% of cathode material manufacturing costs, significantly impacting the performance and cost of power batteries. Meanwhile, LS MnM, a subsidiary of LS Group, also plans to complete construction and commence operation of its battery material plant in Onsan, South Korea, this year, primarily producing metal sulphates such as nickel sulphate, serving as an important raw material for ternary cathode precursors.

Macro:

(1) National Bureau of Statistics: In June 2026, the national Consumer Price Index (CPI) rose 1.0% YoY, and the national Producer Price Index (PPI) rose 4.1% YoY.

(2) Ukrainian forces destroyed 12 Russian oil tankers and a petroleum terminal. It is reported that Putin rejected calls for peace talks, which may escalate the situation in the coming months.

Spot Market:

On July 10, the SMM #1 refined nickel price rose 1,550 yuan/mt from the previous trading day. In spot premiums, the average premium for Jinchuan #1 refined nickel was 2,250 yuan/mt, down 100 yuan/mt from the previous trading day, and the premium range for mainstream domestic electrodeposited nickel brands was -400 to 400 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (2609) consolidated at highs in early trading, closing the morning session at 128,370 yuan/mt, up 1.10%.

Macro sentiment has improved and nickel prices have rebounded recently. The nickel price range is expected to remain at 125,000-135,000 yuan/mt going forward.

Nickel Sulphate

As of this Friday, the average price of SMM battery-grade nickel sulphate edged lower. Demand side, after the midyear reporting period in June, downstream enterprises still hold some inventory, and in July stockpiling sentiment was weak, resulting in low acceptance of nickel salt prices; Supply side, MHP payables and auxiliary material prices remain high, and amid weak demand, some producers have expectations for production cuts, which is expected to accelerate market destocking. Looking ahead, the market is expected to focus on destocking in the first half of this month, with nickel sulphate prices under pressure. Inventory: this week the upstream nickel salt smelter inventory index slid from 9.7 days to 9.5 days, the downstream precursor plant inventory index slid from 12.3 days to 11.7 days, and the integrated enterprise inventory index rose from 7.0 days to 8.1 days; Buy-sell strength: this week the upstream nickel salt smelter's Willingness to Sell Sentiment Factor held at 1.8, the downstream precursor plant's procurement sentiment factor held at 2.5, and the integrated enterprise sentiment factor held at 2.4.（Historical data can be accessed via the database.)

NPI

The SMM average price for 10-12% high-grade NPI fell 1.2 yuan/nickel unit WoW to 1,132.5 yuan/nickel unit (ex-factory, tax included), while the average Indonesia NPI FOB index price fell $0.46/nickel unit WoW to $146.23/nickel unit. High-grade NPI spot cargoes remained on a downward trajectory this week, with the market tug-of-war between longs and shorts continuing to intensify. Transactions remained sluggish throughout the week, and the price divergence between upstream and downstream players gradually widened. At the start of the week, an overall wait-and-see sentiment took hold, with only scattered, small-scale firm orders realized. The price spread for cargoes of different grades continued to narrow, and a thick wait-and-see sentiment held buyers and sellers in a stalemate. Futures moved sideways and failed to boost spot trades. By mid-week, bearish expectations deepened as downstream steel mills widely anticipated further price weakness and pushed for lower prices, with their procurement pace continuing to slow. On the supply side, most sellers held quotations firm with limited willingness to adjust prices, intensifying the tug-of-war at both ends. In the latter half of the week, downstream demand for low-price procurement was concentrated and released, with leading steel mills issuing low-price tenders and purchase orders, driving market buying price intentions down in tandem. However, upstream shipment willingness was subdued by cost constraints, and motivation to sell with deep discounts was insufficient, widening the psychological price gap between upstream and downstream. While more inquiries emerged, they failed to translate into bulk transactions. Meanwhile, the scarcity premium for high-grade cargoes gradually faded amid this week’s weakening market, narrowing the spread between high- and low-grade NPI prices. In the short term, the pattern of the market consolidating on a subdued note is unlikely to change. Stainless steel demand in the off-season has yet to show signs of recovery, and downstream price-suppressing sentiment persists. At the same time, smelting costs provide clear bottom-side support, with suppliers showing a strong inclination to hold back from selling and hold prices firm. Significant downside room for prices is thus limited. Going forward, the market is expected to remain in a state of ongoing tug-of-war between upstream and downstream, with quotation disagreements unlikely to converge in the short term. Spot transactions will struggle to see any obvious volume increase, and the overall market is expected to consolidate within a range on a weak note.

Stainless Steel

The stainless steel spot market was broadly under pressure this week, as futures continued to weaken and broke below the support level of 14,500 yuan/mt, dragging the spot price center steadily lower. At the start of the week, steel mills still intended to hold prices firm, but as stainless steel futures pulled back continuously, mainstream steel mills gradually loosened their stance, lowering guidance prices and raw material procurement tenders. Traders, in turn, discounted their prices to sell, with low-priced resources emerging frequently. The prices of 304 cold-rolled uncut edge coils in the Wuxi and Foshan areas declined markedly. End-use demand is in the traditional off-season, and downstream buyers showed insufficient momentum for essential purchases. Market transactions only experienced staged, short-lived pulses before quickly turning sluggish again, with an overall subdued trading atmosphere. As a result, inventories in the two core markets of Wuxi and Foshan accelerated their buildup. Social inventory rose to 943,700 mt, up 0.89% WoW, making the pressure from the inventory buildup more apparent. Cost side, nickel-related raw material prices moved down in tandem. Although this gave steel mills some profit room, the widening decline in finished product prices led to a slight narrowing of smelting profits. The industry as a whole maintained positive profitability. Overall, the spot stainless steel market exhibited a weak pattern with simultaneous weakening in futures and spots, steel mills withdrawing from holding prices firm, and rising inventory pressure. Market confidence notably weakened, and spot prices are expected to remain under pressure in the near term.

This week, stainless steel prices and production costs declined together, narrowing steel mill profits. Using 304 cold-rolled as the benchmark, the profit margin calculated with current raw materials was 1.71%, and with inventory raw materials was 0.48%. For nickel-related raw materials, affected by the decline in SS futures and pessimistic expectations, mainstream steel mills’ low tenders pulled back market psychological price levels. However, upstream-downstream divergences were significant, and trading was sluggish. As of Friday, the delivered duty-inclusive price of Indonesian high-grade NPI (10-12%) fell by 6 yuan per nickel unit to 1,137 yuan/nickel unit. The stainless steel scrap market also drifted lower, dragged down by falling futures and low steel mill tenders. Steel mills were conservative in procurement, and trading was insufficient. Although stainless steel scrap still held an economic advantage, it could not withstand the blow of weak demand, and is likely to continue consolidating on a weak note in the short term. As of Friday, the price of mainstream 304 off-cuts in Shanghai fell by 250 yuan/mt to around 10,150 yuan/mt. For chrome-based raw materials, high-carbon ferrochrome prices were temporarily stable. Current retail prices had already reached parity with the July mainstream steel mill tender prices, and the market broadly held steady in a wait-and-see mode. As of Friday, the mainstream high-carbon ferrochrome price in Inner Mongolia remained steady WoW at 8,100 yuan/mt (50% metal content).

Nickel ore:

Philippine market:

This week, the Philippine nickel ore market largely maintained stable operation, with CIF China quotes basically flat compared to last week: Ni 1.3% was around $46.25/wmt, Ni 1.4% around $56.50/wmt, and Ni 1.5% around $64.50/wmt; overall trading remained sluggish. Currently, the price spread between Ni 1.3% and Ni 1.4% ore remained at about $10/wmt. According to SMM’s market communications, due to the lower grade of Ni 1.3% ore, the number of downstream smelters that can meet production requirements is limited, and actual trading remained persistently low. In contrast, Ni 1.4% ore is suitable for more Chinese NPI and some Indonesian RKEF smelters, leading to relatively stable procurement demand, so its price performance remained firm.

Supply side, weather in the main mining areas of the Philippines was generally stable, with production and port shipments proceeding normally. Only localized brief showers had limited impact on mining and loading, keeping overall supply steady. Demand side, buyers in China and Indonesia continued their purchase-as-needed strategy. Indonesian smelter inventories remained high, restocking willingness was insufficient, and market transactions were predominantly just-in-time procurement.

Inventory side, Philippine nickel ore inventories at Chinese ports continued to accumulate. As of July 10, total nickel ore inventories at national ports increased to 6.84 million wmt (approximately 53,700 mt in metal content), up by 160,000 wmt from the previous week;

given ongoing port inventory accumulation, ample Indonesian supply, and weak LME nickel prices, short-term Philippine nickel ore prices are expected to consolidate on a subdued note. Subsequent price movements will mainly depend on the progress of Indonesian RKAB approvals and changes in Indonesian ore supply.

Indonesia market:

The Indonesian nickel ore market remained in an overall supply-ample pattern. For the first half of July, the HMA stood at $17,225.67/dmt, with the HPM for 1.4% saprolite ore at about $56.6/wmt and for 1.5% saprolite ore at about $61.5/wmt. The spot market was steady this week: the average CIF price for 1.4% ore held at $57.8/wmt, a premium of about $1.3/wmt over the HPM; for 1.5% ore, it held at $64.5/wmt, a premium of about $3/wmt, both basically flat compared with the previous week.

For limonite ore, the average CIF price for 1.2% ore held at $29.5/wmt and for 1.3% ore at $31.5/wmt, down $0.5/wmt from the previous week. SMM expects the HMA for the second half of July to fall to $16,533.66/dmt. Looking ahead, Indonesian nickel ore prices face downside room.

Despite stagnant prices, market fundamentals remained loose. Smelter inventories were sufficient to cover more than two months of operations, resulting in a supply-demand imbalance that limited short-term restocking demand. Miners generally expected CIF transaction prices to carry a premium of $3-5/dmt over the HPM, which further prompted caution among buyers. Meanwhile, smelters were increasingly demanding higher ore grades, with procurement focusing on ore with nickel grades of 1.45%–1.50%, further depressing demand for lower-grade ore. Small miners showed limited acceptance of the current prices, and actual transactions remained concentrated among large miners. Looking ahead, the general market consensus is that nickel ore prices will still face some downward pressure in the next one to two months, mainly driven by high smelter inventories and sufficient supply. However, if the total approved RKAB volume by the end of Q3 falls below 300 million mt, or if the approval process continues to slow down, combined with potential supply disruptions from the rainy season in Sulawesi in Q4, ore prices could still find some support.