[SMM Nickel Morning Briefing] CSRC focuses on channeling long-term capital into the market and regulating quantitative trading; the most-traded SHFE nickel contract consolidated higher in the morning session.

7.22 Morning Meeting Minutes

Market Hot Topics:

President Subianto Prabowo of Indonesia said that Indonesia plans to fully implement the Single-Gate Export system for strategic commodities on September 1, 2026. The policy has been in a transition phase since June 1, 2026, with PT Danantara Sumberdaya Indonesia (DSI) responsible for coordination to prepare for full nationwide implementation. "We hope to fully implement the Single-Gate Export system for strategic commodities on September 1, 2026," Subianto Prabowo said at a parliamentary meeting. Subianto Prabowo said that the establishment of DSI aims to strengthen government oversight of Indonesia's strategic commodity exports, enhance transparency across the export chain, and more effectively monitor export volumes and foreign exchange repatriation. "We established PT DSI as a tool to enhance the management of national strategic commodity exports. Through the Single-Gate Export system, we will be able to clearly grasp how many goods are exported and how much foreign exchange is repatriated to Indonesia," he said. The Indonesian government stated that the centralized export management framework aims to improve the governance of strategic commodity exports, enhance export transparency, strengthen oversight of export volumes and foreign exchange repatriation, and reduce under-invoicing and transfer pricing.

Macro:

(1) The CSRC held an investor symposium to hear opinions and suggestions. Investor representatives suggested adopting multiple measures to guide medium- and long-term capital into the market, and to regulate the development of quantitative trading and AI applications.

(2) Iran stated that mediators proposed a 10-day ceasefire between the US and Iran to seek the resumption of implementing the memorandum of understanding. Iran's Foreign Ministry confirmed receiving the proposal from mediators: it may negotiate with the US based on national interests.

Spot Market:

On July 21, SMM #1 refined nickel averaged 130,250 yuan/mt, down 600 yuan/mt from the previous trading day. In terms of spot premiums, Jinchuan #1 refined nickel averaged 1,650 yuan/mt, flat from the previous trading day, and the range for mainstream domestic brands of electrodeposited nickel was -300 to 500 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (2609) consolidated higher in early trading, reporting 130,370 yuan/mt as of the close of morning trading, up 0.09%.

With the escalation of the US-Iran conflict, shipping in the Strait of Hormuz has been restricted, and cost support for sulfur has strengthened. However, refined nickel inventories remain difficult to reduce, with domestic and international stocks still at high levels and slow destocking. In the short term, the most-traded SHFE nickel contract is expected to trade in a range of 125,000-130,000 yuan/mt.

Nickel Sulphate

On July 21, the SMM battery-grade nickel sulphate average price declined.

Cost side, the uncertainty in the Strait of Hormuz persisted, and the tug-of-war between longs and shorts in nickel prices was pronounced, with immediate production costs for nickel sulphate consolidating. Supply side, the tight supply pattern for intermediate products remained unchanged, with MHP payables and auxiliary material prices such as sulphuric acid still at elevated levels. Some salt smelters faced expectations for production cuts, though certain recycling enterprises released inventory. Demand side, as nickel prices declined sharply MoM and some downstream enterprises accumulated inventory, 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 procurement sentiment factor for downstream precursor plants was 2.5, and the sentiment factor for integrated enterprises was 2.5.

Looking ahead, as the month-end procurement period approaches, the market is expected to gradually revive, and nickel sulphate prices may rebound.

NPI

July 21 news – The SMM high-grade NPI market sentiment factor stood at 2.00, up 0.01 MoM. The upstream sentiment factor was 2.07, flat MoM, while the downstream sentiment factor was 1.94, up 0.03 MoM. Today's spot market for high-grade NPI saw a marked divergence in expectations between longs and shorts. The downstream generally held a wait-and-see attitude and pushed for lower prices, while most suppliers held prices firm, sustaining a gap between upstream and downstream pricing. Demand side, constrained by the off-season, downstream procurement pace slowed. Some steel mills had ample stockpiles from earlier, resulting in large inventory volumes; coupled with a consensus on the market's bearish outlook for August and expectations for a lower price range next month, their willingness to actively purchase weakened significantly. Supply side, tiered pricing was clear, with leading suppliers maintaining stable sales quotes and a relatively stable price spread structure between high and low-grade materials. Some suppliers turned bullish on the long-term outlook and held back from short-term selling, suspending reports. Coupled with limited fluctuations in futures providing few trading opportunities, many market participants opted to delay quoting, further tightening the circulation of available cargoes and supporting suppliers in holding prices firm.

Stainless Steel

According to SMM, July 21 – SS futures consolidated on a strong note overall. As the non-ferrous metals sector advanced further, SS futures strengthened in tandem. By the midday close, the most-traded SS contract settled at 14,775 yuan/mt. In the spot market, driven by the stronger SS futures, and despite active selling by traders and the dampening effect of weak traditional off-season demand, downstream acceptance of high-priced cargoes remained low. Spot stainless steel quotes held steady, but trading activity picked up.

Most-traded SS futures contract. At 10:15 AM, SS2609 was quoted at 14,740 yuan/mt, flat from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 230-630 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coil in Wuxi remained flat; for cold-rolled uncut edge 304/2B coil, the average price in Wuxi was flat and in Foshan also flat; the price of cold-rolled 316L/2B coil in Wuxi held steady; the quote for hot-rolled 316L/NO.1 coil in Wuxi was unchanged; cold-rolled 430/2B coil in both Wuxi and Foshan stayed flat.

This week on the macro front, US CPI data pulled back, inflation expectations cooled, and market risk appetite recovered slightly. Meanwhile, Indonesia's Ministry of Energy and Mineral Resources clarified that nickel ore production quotas for the year would only see a modest, marginal addition, leaving limited room for growth and extending the pattern of tight raw material supply. This provided solid bottom support for the spot market, driving SHFE nickel and SS futures to stop falling and rebound. On the spot and inventory side, steel mills held prices firm to support the bottom, and both transactions and arrivals improved, leading spot prices to strengthen steadily and inventory to destock notably. This week, mainstream steel mills' resolve to hold prices firm remained strong, effectively stabilizing market trading sentiment. The market is still in the traditional consumption off-season, with end-user rigid demand generally weak and downstream users showing insufficient acceptance of high-priced cargoes after price hikes. Cautious wait-and-see sentiment persists, limiting the upward momentum of spot prices, with gains significantly smaller than those in futures. However, buoyed by the futures rebound, the market sentiment of rushing to buy amid continuous price rises heated up, and phased restocking demand from end-users was released. On-site trading atmosphere improved markedly from the previously sluggish pattern. At the same time, typhoon weather disrupted logistics transportation this week, resulting in insufficient spot arrivals to the market and a slower pace of inventory replenishment. The recovery in transactions combined with reduced arrivals effectively accelerated the destocking of spot cargoes, pushing the social inventory of stainless steel to decline significantly this week. The off-season inventory buildup pressure that had been weighing on the market eased in stages, and spot fundamentals improved marginally. On the cost and profit side, the price trends of finished steel and raw materials diverged this week. Steel mill smelting profits recovered MoM, and the profitability environment continued to improve. Throughout the week, steel mills maintained their push for lower raw material prices, and purchasing prices for high-grade NPI remained in the doldrums, with the center of raw material costs steadily shifting downward. On the spot side, supported by steel mills holding prices firm and the transaction recovery, finished steel prices drifted higher, and the price spread between finished steel and raw materials continued to widen. This directly drove a significant expansion in stainless steel smelting profit margins, further strengthening the industry's overall profit resilience, and continuously easing profit pressure on the production side. Overall, the stainless steel market this week displayed a pattern of firm spot prices, declining inventory, and recovering profits. Tight nickel resource expectations underpinned the industry's bottom, while steel mills holding prices firm cemented the spot price center. Off-season phased restocking and logistics disruptions drove destocking, and weak raw material performance further expanded steel mills' profit margins. However, the core issues of weak off-season rigid demand and insufficient acceptance of high prices have not yet fundamentally improved, leaving spot prices without sufficient momentum for a sustained, significant rise.

Nickel Ore:

Philippine Market:

Price-wise, nickel ore prices in the Philippine market remained largely stable this week, but market sentiment weakened further as ore supply continued to increase and downstream purchasing demand stayed soft. Currently, CIF China offers for Ni 1.3% ore are around $46/wmt, Ni 1.4% at $56.5/wmt, and Ni 1.5% at $64.5/wmt, all flat from last week. The price spread between Ni 1.3% and Ni 1.4% ores remains around $10/wmt. Although their nickel grades differ by only 0.1 percentage point, Ni 1.4% ore can deliver roughly 7%–8% higher recoverable nickel metal content, offering higher smelting efficiency and lower production cost per unit of nickel. Meanwhile, ocean freight, port handling, and logistics costs are largely fixed, making high-grade ore more economical on a per-unit nickel cost basis. Against a backdrop of sustained pressure on NPI smelting margins, downstream procurement remains concentrated on ores with Ni ≥1.4%, while Ni 1.3% ore, due to higher nickel unit consumption, faces increasing difficulty in sales. At the same time, the recent increase in supply from the Philippines has been mainly low-grade ore, leading to a continuous buildup of Ni 1.3% ore inventory, putting prices under pressure, and further widening the spread between Ni 1.3% and Ni 1.4% ores. By contrast, demand for Ni 1.4% and Ni 1.5% ores remained relatively steady.

Supply and weather-wise, the Philippine nickel ore market is currently showing an increasing supply and relatively weak demand. Although the Philippines is now in its rainy season, weather-related impact on nickel ore production has been generally limited. Recent rainfall has been concentrated mainly in western and northern Luzon, especially in the Zambales area, while Surigao, the main nickel mining area in the Philippines, experienced generally dry weather over the past week with only scattered showers, allowing mining, overland transport, and port loading to remain largely normal, with only some smaller mines affected by localized rains. In the coming week, Zambales is expected to see continued relatively heavy rainfall, potentially affecting some local mine production and logistics; Surigao is forecast to remain relatively dry with only localized showers, having limited impact on mine output and port shipments. Overall, sporadic rainfall may cause brief operational delays at a few mines but is not expected to significantly affect the Philippines’ overall nickel ore supply and exports, so the current rainy season provides only limited support to ore prices. As mine output continues to rise, market availability of ore is increasing, while buyer procurement remains cautious, with ever-higher requirements on ore grades, keeping the focus on medium-to-high-grade ores. Sales of low-grade ore have slowed noticeably, and stocks at mines and ports are building, further depressing market prices.

On market sentiment and the outlook: in terms of supply, mines in the southern Philippines continue to maintain normal production and shipments, but with inventories building, sales pressure is mounting, and some mines have gradually shown increased willingness to negotiate, especially for low-grade ore. On the demand side, buyers are still primarily meeting immediate production needs, without actively building inventory. Against the backdrop of uncertain downstream demand, overall procurement strategies remain relatively cautious. Looking ahead, the Philippine nickel ore market is expected to remain in the doldrums in the short term. If subsequent weather does not bring persistent heavy rainfall causing significant supply tightness, and downstream demand does not improve markedly, the continuous increase in ore supply will still exert pressure on the market. High-grade ore is expected to continue to receive relatively stable demand support, while low-grade ore may face significant downward pressure on prices due to ample supply and slow sales.

Indonesia Market:

In terms of prices, with the July second-half HMA and HPM officially coming into effect on July 15, Indonesia's local nickel ore prices have been adjusted downward in line with the new benchmark. For limonite ore, Ni 1.2% CIF prices are around $29/wmt, and Ni 1.3% ore around $31/wmt; for saprolite ore, Ni 1.4% CIF prices are around $54.9/wmt, Ni 1.5% ore around $61.2/wmt, and Ni 1.6% ore around $66.1/wmt. Affected by the HMA decline, HPM base prices for all grades have pulled back simultaneously, and Indonesia's local ore transaction base prices have generally decreased by about $2–3/wmt compared with the first half of the period. Current market transactions are largely conducted based on the new HPM base price, and against the backdrop of loose supply and high smelter inventory, Indonesia's local nickel ore prices are expected to remain in the doldrums in the short term.

In terms of weather, conditions in Indonesia’s main nickel ore producing areas are expected to remain relatively stable overall in the coming week. Central Sulawesi, Southeast Sulawesi, and Halmahera are forecast to experience intermittent light to moderate rain, with localized thunderstorms, but the rainfall will be mainly short-lived and intermittent, and is not expected to have a sustained impact on mine production, land transportation, or port loading. Overall, localized rainfall may cause brief delays at individual mine sites, but currently there is no widespread heavy rainfall weather, and it is unlikely to significantly affect Indonesia's nickel ore supply and port loading.

In terms of supply-demand and market sentiment, Indonesia's local nickel ore market is still generally in a loose supply situation. Smelters’ inventory remains at relatively high levels: pyrometallurgy (RKEF) smelters have nickel ore inventory sufficient for about 2–3 months of production, while hydrometallurgy smelters have inventory for about 2 months, so overall restocking demand remains limited.

Supply side, mines maintain normal production and sales, saprolite ore supply remains ample, and RKEF smelters’ procurement demand is generally stable, but high inventory limits upside room for prices. Limonite ore side, HPAL project procurement demand remains stable, but market supply still exceeds short-term demand. The current transaction benchmark price for limonite ore is around $33–35/wmt. Small and medium-sized miners show limited acceptance of the current price level and relatively low willingness to sell. Actual deals remain concentrated among large miners. With the new HMA and HPM benchmark prices officially taking effect from July 15, mines continue to watch the impact of the new HPM benchmark price downward adjustment on subsequent transaction prices. Most miners still hope for transaction prices $3–5/wmt above the HPM benchmark price, and bargaining between buyers and sellers persists.

Demand side, inventories at both pyrometallurgical and hydrometallurgical smelters stay high. Procurement remains focused on meeting immediate production needs without active restocking. Meanwhile, some smelters have raised their purchase grade requirements to Ni 1.45%–1.50%, further weakening market demand for low-grade ore. Against the backdrop of ample ore supply, high smelter inventories, and the overall downward adjustment of HPM benchmark prices, overall spot transactions remain sluggish and market wait-and-see sentiment is strong. Overall, Indonesia's local nickel ore market still exhibits an operating pattern of ample supply and weak demand, with near-term spot procurement remaining largely need-based.

Outlook side, the market will continue to monitor the progress of supplementary RKAB approvals, which remains a key factor affecting Indonesia's nickel ore supply in H2. According to market feedback, even if supplementary RKAB quotas are approved, it will still take a buffer period of about one month from approval to actual supply release, so the near-term impact on market supply will be relatively limited. If the total approved volume of supplementary RKAB by the end of Q3 falls short of market expectations, or the approval process continues to slow, Indonesia's local nickel ore prices may still find some support. Additionally, as Sulawesi enters the rainy season in September–October, mining and transportation may be affected to some extent. If supply tightens, there could still be a possibility of a phased rebound in nickel ore prices in Q4.