[SMM Analysis] Nickel Intermediate Product Market Experiences Holiday Stagnation, Trading Sluggish

This week, the MHP market saw sluggish trading. Supply side, upstream smelters have sold out their Q1 supply, and the implementation of Indonesia's RKAB policy has not yet had a significant impact. Demand side is also in a wait-and-see stalemate. Downstream precursor enterprises have yet to finalize their post-holiday order production schedules, lacking the actual impetus to execute purchases. Although traders have provided sporadic offers, few deals were concluded against the backdrop of no clear directional guidance from either upstream or downstream. Amid the overall tight supply-demand balance, MHP nickel payables and cobalt payables held flat at highs this week. Looking ahead, due to expectations that nickel prices will hold up well, combined with downstream's low acceptance of high prices, nickel payables are expected to have slight downside room after the holiday, while cobalt payables are expected to remain flat at highs.

The high-grade nickel matte market showed no significant fluctuations, with the overall situation basically flat compared to before. Spot availability maintained a tight balance, with payables levels remaining high; there were no incremental trading drivers before the holiday. Looking ahead, high-grade nickel matte has strong cost support, coupled with sellers' strong willingness to hold prices firm, so nickel payables are expected to remain flat at highs.

This week, sulfur prices corrected from highs, primarily driven by the approaching holiday and back-and-forth negotiations between upstream and downstream. On one hand, as the Chinese New Year holiday approaches, spot sulfur trade in many parts of Asia has noticeably stalled, with most buyers postponing subsequent purchases until March, suppressing spot demand in February. On the other hand, Indonesian enterprises' acceptance of the current high price levels has significantly decreased, buyer offer intentions have turned conservative, and the market has entered a price negotiation phase. In the short term, the market is under pressure due to holiday sentiment disturbances, but the long-term demand logic based on the release of Indonesian capacity remains intact. Prices are expected to move sideways at high levels, with upside room remaining in the long term.

The core driver for nickel prices this week was the formal implementation of Indonesia's RKAB quota policy. Indonesian officials revealed that the 2026 nickel ore RKAB production target is set at 260-270 million mt, boosting market sentiment. Nickel prices rose WoW this week. In terms of payables, nickel prices for MHP and high-grade nickel matte increased WoW, and cobalt prices for MHP also increased.