[SMM Analysis] Supply Recovery Expectations Rise, Market Sentiment Weakens, and Prices Come Under Pressure

    The SMM average price for 10-12% high-grade NPI fell by 2.8 yuan/nickel unit WoW to 1,133 yuan/nickel unit (ex-factory, tax included); the average Indonesian NPI FOB index price rose by $0.13/nickel unit WoW to $146.52/nickel unit. This week, the high-grade NPI spot market remained in a deadlock overall, with transaction volumes remaining limited throughout.

From the supply side, nickel prices have declined, while market expectations for higher future supply have grown gradually. Additional overseas cargoes have not arrived at ports in large volumes for the time being. Port arrivals are projected to rise further in the second half of the month, and port operation conditions have improved. Nevertheless, high ocean freight rates create cost disturbances for imported materials. Sellers generally keep offers at high levels yet face constraints on actual spot sales. Some price‑holding sentiment has loosened, and certain participants may suspend or postpone offering prices. On the demand side, major stainless steel mills have mostly finished peak‑season inventory building, slowing their overall purchasing pace. Only a small number of enterprises need restocking. Downstream buyers hold generally cautious sentiment. There exists an obvious price gap between mills’ acceptable price levels and sellers’ offers, and downstream acceptance of high‑priced cargoes is low. Along with falling futures prices, mills’ purchasing intentions move lower, market wait‑and‑see sentiment intensifies, and physical spot transactions remain thin. Bull‑bear divergence persisted through the week. As futures weakened, market confidence softened and bearish sentiment picked up. Considering expectations of supply recovery and insufficient downstream rigid demand, short‑term NPI prices are expected to stay under pressure.

   From the perspective of NPI conversion to high‑grade nickel matte, the discount of NPI against refined nickel narrowed further this week. Nickel prices dropped sharply during the week, and NPI fluctuated lower following futures. Spot market trading stayed quiet. The average discount of NPI versus refined nickel continued to narrow to minus one hundred and fifty‑two yuan per nickel point. Looking ahead to next week, refined nickel prices are expected to keep moving down, NPI will run weak in tandem, and the price gap between the two products may keep narrowing.

  Total smelting costs for NPI in China and Indonesia were roughly flat this week, with full‑cost levels comparable between the two regions. Key raw materials saw limited price swings without clear one‑way rises or falls. Costs of auxiliary materials, energy and other production factors remained stable and exerted no major disturbance on smelting costs in both markets. Cost pressure for smelters at home and overseas stayed relatively steady. Costs do not generate strong driving forces for now and offer limited guidance for current spot market performance.