[SMM Nickel Morning Wrap] U.S. June CPI Below Expectations, the Most-Traded SHFE Nickel Contract Drifts Lower in Early Trading

July 16 Morning Meeting Minutes

Market Hot Topics:

Indonesia's Ministry of Energy and Mineral Resources (ESDM) has officially released the Nickel Ore Benchmark Price (HMA) for the second half of July 2026. The HMA for the second half of July is: nickel ore at $16,533.67/mt (down $1,059.66 or 6.02% from the first half of July 2026, which was $17,593.33/mt); cobalt at $55,863.00/mt; iron ore at $1.44/mt; and chrome ore at $6.37/mt. Based on SMM's internal calculation model, simulated calculations were performed for saprolite ore (containing 20% iron, 1% chromium, and 0.05% cobalt) and limonite ore (containing 45% iron, 2% chromium, and 0.10% cobalt). The changes in the HPM benchmark prices for various nickel ore grades are as follows:

Ni 1.2%: $45.25/wmt (down $2.15)

Ni 1.3%: $49.44/wmt (down $2.42)

Ni 1.4%: $53.6/wmt (down $2.97)

Ni 1.5%: $58.23/wmt (down $3.27)

Ni 1.6%: $63.06/wmt (down $3.58)

Macro:

(1) US June Consumer Price Index (CPI) rose 3.5% YoY, compared with expectations of 3.8% and a prior reading of 4.2%. US June CPI fell 0.4% MoM, versus an expected 0.1% decline and a prior 0.5% increase. Following the release of the US June CPI data, traders pushed back expectations for US Fed interest rate hikes to October.

(2) General Administration of Customs: Since the beginning of this year, China's export growth rate has exceeded 10%, maintaining growth for 11 consecutive quarters.

Spot Market:

On July 14, SMM #1 refined nickel price fell 250 yuan/mt from the previous trading day. In terms of spot premiums, the average premium for Jinchuan #1 refined nickel was 2,000 yuan/mt, down 100 yuan/mt from the previous trading day, while the range for mainstream domestic electrodeposited nickel brands was -300 to 500 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (2609) drifted lower during the morning session, closing the morning session at 128,870 yuan/mt, down 0.43%.

US inflation cooled sharply in June, with the US June unadjusted core CPI rising 2.6% YoY, below the market expectation of 2.8% and the prior reading of 2.9%. The cooling inflation further delayed market expectations for US Fed interest rate hikes, and the US dollar extended its decline. In the short term, nickel prices may rebound, with the most-traded SHFE nickel contract expected to trade within a range of 127,000-133,000 yuan/mt.

Nickel Sulphate

On July 15, the average price of SMM battery-grade nickel sulphate edged down.

Cost side, the US CPI data released yesterday came in weaker than market expectations, but uncertainty in the Middle East persisted, causing nickel prices to retreat after a rapid rise. The spot production cost for nickel sulphate remained stable. Supply side, the tight supply pattern for intermediate products remained unchanged. MHP payables, sulphuric acid, and other auxiliary material prices remained high, with some nickel salt smelters expecting production cuts, while some recycling enterprises released inventory. Demand side, due to a significant decline in nickel prices MoM and some inventory accumulation at downstream enterprises, downstream stockpiling sentiment was weak and their acceptance of nickel salt prices was relatively low. Today, the Willingness to Sell Sentiment Factor for upstream nickel salt smelters was 1.8, the purchase sentiment factor for downstream precursor plants was 2.5, and the sentiment factor for integrated enterprises was 2.4 (log in to the database for historical data).

Looking ahead, the stockpiling period in July is expected to be delayed to late July, and attention should be paid to the supportive impact of nickel prices and intermediate products on costs.

NPI

On July 15, the SMM high-grade NPI market sentiment factor was 1.96, down 0.02 MoM. The upstream sentiment factor for high-grade NPI was 2.06, down 0.04 MoM, while the downstream sentiment factor for high-grade NPI was 1.86, flat MoM. The tug-of-war between sellers and buyers in the high-grade NPI spot market intensified today, with the psychological price gap between upstream and downstream players persisting and overall transactions remaining sluggish. The demand side continued to be weighed by the off-season, compounded by another price drop for steel scrap. Steel mill purchase willingness weakened, with most downstream enterprises' desired prices around 1,120-1,130 yuan per nickel unit, and low acceptance for cargoes priced at or above 1,140 yuan per nickel unit. Supply side, supplier offers were generally high, with mainstream spot offers concentrated around 1,150 yuan per nickel unit. Some merchants held expectations of lowering offers, but were reluctant to cut prices for sales in the short term. Affected by the unclear market direction, most merchants only traded fixed premiums based on expectations for tight forward supply, without offering fixed-price quotes to the market. Significant volumes of spot orders are expected to remain scarce in the market in the short term, while the downside room for high-grade NPI spot prices is limited.

Stainless Steel

On July 15, SMM reported that SS futures showed a largely stable and consolidating trend. Although SS futures fell during the night session, losses were partially recovered after the morning opening, and prices subsequently moved sideways. As of the close, the most-traded SS contract settled at 14,595 yuan/mt. In the spot market, the current off-season demand, combined with intensified volatility and a lack of clear directional guidance for SS futures recently, led to cautious wait-and-see sentiment among downstream end-users, with overall transactions relatively sluggish. Spot prices were largely stable, with only a few traders facing shipment pressure occasionally offering low-priced cargoes.

The most-traded SS futures contract. At 10:15 AM, SS2608 was quoted at 14,660 yuan/mt, up 120 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 260-610 yuan/mt. In the spot market, the average price for cold-rolled 201/2B coil in Wuxi was flat; for cold-rolled uncut edge 304/2B coil, the average price in Wuxi rose 25 yuan/mt, while the average price in Foshan held steady; the price for cold-rolled 316L/2B coil in Wuxi fell 100 yuan/mt; for hot-rolled 316L/NO.1 coil, quotes in Wuxi were flat; cold-rolled 430/2B coil was flat across both Wuxi and Foshan.

This week, intensified macro liquidity disruptions drove stainless steel futures into an independent weak trend, with the futures decoupling significantly from the operating pace of SHFE nickel and other non-ferrous metals. During the week, rapid shifts in fund sentiment triggered wild swings in SS futures, following the earlier breakdown below the key support level of 14,500 yuan/mt. The overall trend center continued to shift lower, with market trading sentiment tilting broadly bearish. Spot and inventory side, the breakdown and weakening of the futures continued to drag down spot market performance, as off-season fundamental negatives were released intensively. The market has now entered the traditional consumption off-season, with inherently weak end-user rigid demand, compounded by the continued downward trend further denting market confidence. Downstream end-users were dominated by a wait-and-see sentiment, with purchase willingness remaining sluggish. This week, mainstream steel mills abandoned their earlier strategy of holding prices firm, proactively lowering spot guidance prices, which led market spot quotes to pull back in tandem. On-site trading exhibited a pattern of intermittent, impulse-style releases followed by rapid cooling, with a severe lack of sustained rigid demand, and overall transactions returned to a sluggish pattern. Against the backdrop of weak end-user purchases and hindered destocking of cargoes, the pace of inventory buildup in the market accelerated markedly, with social inventory continuing to accumulate, further highlighting spot fundamental pressures. Cost and profit side, this week, finished product and raw material prices moved down in sync. Steel mill smelting profits narrowed slightly but remained positive. Weighed by falling spot prices and compressed margins on finished products, mainstream steel mills lowered their raw material purchase expectations, announcing low-priced NPI purchase tenders, which drove high-grade NPI market prices lower accordingly. Meanwhile, stainless steel scrap purchase prices pulled back in sync, shifting the overall raw material cost center lower. Steel mill profits were slightly compressed MoM, but the industry overall has not incurred losses, with production profit resilience still existing. Overall, this week the stainless steel market exhibited a subdued pattern characterized by a breakdown in futures, loosening spot prices following the decline, accelerating inventory buildup, and slightly contracting profits. Macro capital disruptions dictated the independent weakening of futures, while off-season rigid demand weakness, the withdrawal of steel mills’ price-holding stance, and inventory accumulation were the core spot negatives. The short-term market weakness is difficult to reverse, with futures set to continue consolidating on a subdued note and spot prices staying under sustained pressure.

Nickel ore:

Philippine market:

This week, the Philippine nickel ore market was generally steady, with CIF China quotes largely flat WoW. Ni 1.3% was quoted at about $46.25/wmt, Ni 1.4% at about $56.5/wmt, and Ni 1.5% at about $64.5/wmt, with overall transactions remaining sluggish. Currently, the price spread between Ni 1.3% and Ni 1.4% ore remains around $10/wmt. Based on SMM's market communication, due to the low grade of Ni 1.3% ore, only a limited number of downstream smelters can meet production requirements using this material, resulting in persistently thin actual transactions. In contrast, Ni 1.4% ore is suitable for a wider range of Chinese NPI and some Indonesian RKEF smelters, leading to relatively stable procurement demand and thus firmer price performance.

Supply side, weather conditions in the main mining areas of the Philippines have been generally stable, with normal production and port shipments. Only localized brief showers occurred, having limited impact on mining and loading, keeping overall supply steady. Demand side, Chinese and Indonesian buyers continued their strategy of purchasing as needed. Indonesian smelters' inventories stayed high, with insufficient restocking willingness, and market transactions were dominated by 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 Ni in metal content), up 160,000 wmt from the previous week.

Against the backdrop of accumulating port inventories, ample Indonesian supply, and weak LME nickel prices, Philippine nickel ore prices are expected to consolidate on a subdued note in the short term, with the subsequent price trend depending mainly on the progress of Indonesia's RKAB approvals and changes in Indonesian ore supply.

Indonesian Market:

The Indonesian nickel ore market remains in an overall loose supply condition. Indonesia's Ministry of Energy and Mineral Resources announced the HMA nickel reference price for the second period of July at $16,533.67/dmt, a significant drop from the first period of July ($17,593.33/dmt). The theoretical HPM prices fell accordingly, with the HPM for 1.4% saprolite ore estimated at around $53.6/wmt, and the HPM for 1.5% saprolite ore at around $58.23/wmt. This week, the spot market was generally stable, with the average CIF price for 1.4% ore holding at $55.1/wmt, representing a premium of about $1.3/wmt over the HPM. The average CIF price for 1.5% ore held at $61.5/wmt, a premium of about $3/wmt, both basically flat compared to last week.

For limonite ore, the average CIF price for 1.2% material held at $29.5/wmt, and the average CIF price for 1.3% material held at $31.5/wmt. Looking ahead, Indonesian nickel ore prices face downside room.

Despite stagnant prices, market fundamentals remain loose. Current smelter inventories are sufficient to support production for more than two months, and a supply-demand gap exists, limiting short-term restocking demand. Miners generally expect CIF transaction prices to be $3 to $5 above the HPM, further prompting cautiousness among buyers. Meanwhile, smelters are increasingly demanding higher-grade ore for procurement, with purchasing centers focusing on ore with a nickel grade of 1.45%–1.50%, further suppressing demand for low-grade ore. Small miners have limited acceptance of current prices, and actual transactions remain concentrated among large miners. Looking ahead, the market generally agrees that nickel ore prices will still face some downward pressure in the next 1-2 months, mainly driven by high smelter inventories and ample supply. However, if the total approved RKAB quota by the end of Q3 is less than 300 million mt, or the approval process continues to slow down, coupled with potential supply disruptions from the rainy season in Sulawesi in Q4, ore prices are still expected to find some support.