Philippine Nickel Ore Supply Remains Weak, High-Grade NPI Prices Expected to Remain Stable [SMM Nickel Morning Meeting Summary]

4.2 Nickel Morning Meeting Minutes

Refined Nickel: SMM reported on April 1 that the spot premiums/discounts for Jinchuan No.1 nickel were quoted in the range of 1,600-1,800 yuan/mt, with an average premium of 1,700 yuan/mt, up 250 yuan/mt from the previous trading day. The premiums/discounts for Russian nickel were quoted in the range of -100 to 200 yuan/mt, with an average premium of 50 yuan/mt, up 100 yuan/mt from the previous trading day.

Futures side, nickel prices rebounded slightly today after falling in the night session. As of 11:30, the closing price was 130,080 yuan/mt, down 0.34% from the previous trading day's settlement price, with a high of 130,140 yuan/mt.

In terms of spot premiums/discounts, Jinchuan brand nickel prices rose 250 yuan from the previous trading day. The main reason was that nickel prices fell in the night session, and traders appropriately raised premiums to protect their costs.

From a macro perspective, SHFE nickel futures contracts have been fluctuating rangebound recently, possibly due to weak market demand and the fading of sentiment impact from Indonesian policies, coupled with the departure of long funds. However, as ore supply remains tight, nickel prices have some cost support at the current level, and there is still room for short-term increases.

In terms of the price spread with nickel sulphate, the SMM1# refined nickel price was 128,950-131,150 yuan/mt today, with an average price of 130,050 yuan/mt, down 950 yuan/mt from the previous trading day's spot price. The spread was around 1,595 yuan/mt (Ni contained), and nickel sulphate still traded at a discount to refined nickel.

Nickel Sulphate: On April 1, the SMM battery-grade nickel sulphate index price was 28,045 yuan/mt, with the battery-grade nickel sulphate quotation range at 27,970-28,550 yuan/mt, and the average price was flat from the previous day.

Cost side, MHP market circulation is tight, and some nickel sulphate plants have not yet completed MHP stockpiling for Q2. As recent MHP production has fallen short of expectations, the supply-demand gap is expected to further widen, leading to continued increases in MHP price coefficients. Nevertheless, refined nickel production costs may limit the extent of the increase. Supply side, some nickel salt plants have stopped quoting due to critically low inventories. In addition, some nickel salt plants maintain a firm sentiment to stand firm on quotes based on the relatively tight circulation of nickel salts. Demand side, some precursor plants have restocking needs due to low raw material inventory levels, and their acceptance of nickel sulphate prices has also increased. Currently, buyers and sellers are still in a game over prices, and nickel sulphate prices are expected to have room for further increases in the short term.

Nickel Pig Iron: On April 1, the SMM 8-12% high-grade NPI average price was 1,030.5 yuan/mtu (ex-factory, tax included), up 1 yuan/mtu from the previous working day.

Supply side, domestically, current Philippine nickel ore replenishment remains weak, smelter profits have slightly recovered, and production increases are limited. In Indonesia, nickel mine output still needs time to materialize, current premiums are high, and although there is new ramp-up production, capacity release is relatively limited, and Indonesian NPI supply has increased slightly. Demand side, stainless steel production remains high, demand for high-grade NPI is optimistic, and coupled with the current tight market circulation, NPI transaction prices are relatively concentrated, with active transactions recently and price ranges within the mainstream market range. In the short term, high-grade NPI prices are expected to fluctuate steadily.

Stainless Steel: On April 1, stainless steel market spot prices rose, market inquiries were active, but transactions were flat. Downstream wait-and-see sentiment was strong, optimizing raw material inventory digestion, and restocking enthusiasm was low. Futures side, the most-traded contract 2505 fluctuated upward, and at 10:30 am, SS2505 was quoted at 13,505 yuan/mt, up 60 yuan/mt. In Wuxi, the 304/2B spot premiums/discounts were in the range of 265-565 yuan/mt.

Today, spot prices rose. Cost support drove prices up, spot merchants raised quotes, and large real orders were negotiable. By series, the price of cold-rolled 201/2B coil in Wuxi was 8,275 yuan/mt, and in Foshan was 8,300 yuan/mt. The average price of cold-rolled cut edge 304/2B coil in Wuxi was 14,050 yuan/mt, and in Foshan was 13,975 yuan/mt. The price of cold-rolled 316L/2B coil in Wuxi was 24,350 yuan/mt, and in Foshan was 24,550 yuan/mt. The price of hot-rolled 316L/NO.1 coil in Wuxi was 23,600 yuan/mt, and in Foshan was 23,650 yuan/mt. The price of cold-rolled 430/2B coil in Wuxi was 7,500 yuan/mt, and in Foshan was 7,475 yuan/mt.

Nickel Ore: Last week, Philippine low-grade and high-grade nickel ore prices held steady, while medium and high-grade ore FOB prices were adjusted upward overall, and medium and high-grade nickel ore prices saw a slight increase again. The main reasons come from two aspects: first, as an exporter, Indonesian nickel ore prices climbed and still have room for further increases, which has provided some support for Philippine nickel ore export prices; second, from a supply-demand perspective, Surigao region began to offer and ship this month, but supply recovery has been slow due to weather impacts. On the demand side, domestic nickel pig iron plant inventories are mostly still at low levels, and there is a strong need for just-in-time procurement of raw materials. However, although the current rise in downstream high-grade NPI prices has brought some profit recovery, domestic iron plants are still in losses, and their ability to accept high-priced nickel ore is limited. In terms of ocean freight rates, rates were slightly reduced during the week, with the rate from Surigao to Lianyungang, China, down by about $0.5/wmt. Overall, affected by the strong supply and weak demand pattern and the rise in Indonesian ore prices, Philippine prices have increased. SMM expects that Philippine ore prices may continue to fluctuate upward in the short term.

Current market transaction prices: For pyrometallurgical ore, SMM's Indonesian local ore 1.6% weekly price was $51/wmt; for hydrometallurgical ore, SMM's Indonesian local ore 1.2% weekly price was $26/wmt. Indonesian pyrometallurgical nickel ore may see another increase in April, with current April premiums of $23-25 under negotiation, while hydrometallurgical ore CIF prices may remain stable with a weak trend. From a supply perspective, this year's Sulawesi rainy season has lasted longer, which has had a certain impact on nickel ore mining and transportation, and supply recovery in main mining areas such as Sulawesi has been relatively slow. In addition, the Indonesian Lebaran holiday from late March to early April, with mines and workers on holiday, will also affect nickel ore supply. From a demand perspective, Indonesian nickel pig iron smelting enterprises generally have low raw material inventories and need to restock just-in-time, coupled with expectations of NPI inventory increases, demand-side support remains. SMM expects that nickel ore supply may continue to be tight. In terms of policies, the PNBP policy is still expected to be implemented soon. If the policy is implemented, the sales cost of nickel ore mines will increase, and coupled with the current continuous rise in downstream NPI and MHP prices, from the current market situation, mines have strong bargaining power, and the cost increase brought by this policy to mines may be mostly passed on to downstream enterprises, which will strongly support nickel ore prices. For hydrometallurgical ore, downstream MHP has strong expectations for short-term production cuts, demand support has significantly weakened, and prices may fluctuate weakly. Overall, SMM expects that Indonesian local pyrometallurgical nickel ore prices may continue to rise, while Indonesian local hydrometallurgical ore prices may remain stable with a weak trend.