During the week, the average price of high-nickel pig iron (NPI) with 8-12% nickel content, as tracked by SMM, was 979 RMB per nickel point (ex-factory, including tax), reflecting a decrease of 7.9 RMB per nickel point from last week's average. The Indonesian NPI FOB index dropped by $0.5 per nickel point compared to the previous week. Overall, the prices of nickel pig iron have shown a downward and volatile trend this week.
From the supply side, domestically, the price of nickel ore slightly loosened from its high level. However, due to weak production incentives among smelters, output remained stably low. Although domestic smelters' production enthusiasm has slightly decreased, the overall supply quantity remained relatively stable. In Indonesia, despite the fact that raw material inventories in Indonesian smelters are at low levels, the continuous addition of new production capacity only led to limited output increase, resulting in insignificant supply growth.
On the demand side, the stainless steel market entered its peak season, yet its prices consecutively fell, and the profit losses of steel mills expanded. In this scenario, the procurement cycle of raw materials for stainless steel manufacturers lengthened, resulting in a cautious short-term demand for nickel pig iron and weakened procurement intention prices. This has placed certain downward pressure on the market demand for nickel pig iron.
In summary, the supply of nickel pig iron appears to have a relaxed expectation, but due to continued cost support, prices may continue to decline in the short term, though the extent of the decline is limited. Meanwhile, the average discount of high-nickel pig iron compared to electrolytic nickel widened to 264.1 RMB per nickel point within the week, expanding by 27.8 RMB per nickel point from last week. High-nickel pig iron prices fluctuated lower, while the basis difference in the stainless steel market somewhat corrected. Amid spot profit losses, the procurement prices for nickel pig iron by stainless steel plants gradually weakened.
In the pure nickel market, SHFE nickel prices experienced a volatile rebound during the week. The Federal Reserve's announcement of a 50 basis points interest rate cut on Wednesday created a positive impact on the base metal market, leading to a volatile upward correction in prices. This drove the discount between high-nickel pig iron and electrolytic nickel to slightly widen in fluctuations. In the short term, due to weak downstream stainless steel consumption negatively feeding back into the high-nickel pig iron market, its prices remain weak. In addition, under the context of the Fed's 50 basis points interest rate cut, nickel prices are expected to continue a volatile upward correction.
From the current market analysis, it is expected that the price differential between nickel pig iron and electrolytic nickel may continue to widen next week. Despite high-nickel pig iron facing certain short-term downward pressure, the nickel price is supported by interest rate cuts and favorable market factors, suggesting that the trend of gradually widening price differentials will persist.
In conclusion, the overall market performance of nickel pig iron was poor this week, constrained by both relaxed supply and weak demand, leading to sustained price declines. Meanwhile, nickel prices maintained a volatile rebound influenced by interest rate cuts. The price differential between the two is likely to continue growing, although the downward space for high-nickel pig iron prices is somewhat limited. Continuous attention needs to be given to market dynamics and policy changes that may impact these trends.
