[SMM Analysis] Nickel Alloy and Special Steel Market Dynamics in the Half Month After the Holiday: Stable Growth in High-End Sector Demand

Nickel Alloy Special Steel Market Dynamics in the Half-Month After the Holiday: Comprehensive Analysis of Cost, Demand, and Supply

Cost Side: Nickel Prices Fluctuate Downward, Relieving Cost Pressure on Special Steel

At the beginning of February 2025, nickel prices continued the downward trend observed at the end of January. Influenced by supply surplus and a significant increase in LME nickel inventory, the price of the most-traded SHFE nickel contract declined steadily from February 5 to February 13, hitting a low of 123,880 yuan/mt, with a drop exceeding 2.7%. The decline in nickel prices was primarily attributed to uncertainties surrounding Indonesia's RKAB (nickel ore mining quota) policy and the accumulation of global nickel inventory surplus. Although the Indonesian government attempted to boost nickel prices by tightening nickel ore quotas, market skepticism about the policy's implementation exerted pressure on nickel prices.

For the nickel alloy special steel industry, nickel, as a key raw material, saw its price decline directly reducing production costs. Special steel enterprises, particularly high-end manufacturers, benefited from the downward trend in nickel prices, which helped restore profit margins. However, the volatility of nickel prices remains significant, and companies need to closely monitor policy changes in Indonesia and the Philippines, as well as inventory dynamics, to mitigate cost risks.

Demand Side: Stable Growth in High-End Demand, Marginal Improvement in New Energy Sector, but Limited Overall Growth 

On the demand side, the primary applications of nickel alloy special steel are concentrated in high-end industries such as military, aerospace, and large-scale medical equipment, where material performance requirements are extremely high, driving stable demand growth. Some applications also extend to civilian uses, such as corrosion-resistant pipelines and valves. Additionally, with the continued growth in NEV production and sales, demand for nickel alloy special steel in the new energy sector is expected to see some marginal improvement in Q3.

Supply Side: Increased Uncertainty in Indonesian Policies, Global Supply Surplus Persists

On the supply side, the volatility of Indonesia's nickel ore policies remains a focal point for the market. In 2025, the approval process for Indonesia's nickel ore mining quotas has been slow. Although the latest data shows an approved volume of 250 million wmt, it still falls short of the market's expected demand of 290 million wmt. The Indonesian government's uncertain stance has heightened concerns about supply shortages, while also providing some support for nickel prices.

Globally, the supply surplus in the nickel market is unlikely to reverse. Class 1 nickel inventory is expected to continue rising in 2025, albeit at a slower pace. The capacity release from Indonesia's hydrometallurgy projects and the ongoing supply of low-cost laterite nickel further exacerbate the global nickel market's surplus pressure. For the nickel alloy special steel industry, the supply surplus may lead to further declines in raw material prices, but companies must also remain vigilant about potential supply disruptions caused by changes in Indonesian policies.