[SMM Nickel Morning Meeting Summary] US Further Tightened Economic Restrictions on Iran, After Plunging in the Night Session, the Most-Traded SHFE Nickel Contract Rebounded Slightly in the Morning Session

8.24 Morning Meeting Summary

Market Hot Topics:

Orion CMC, an investment alliance backed by the US government, is negotiating with Lifezone Metals to invest in the Kabanga nickel project in Tanzania, with a proposed investment of approximately $500 million to $600 million to acquire a significant minority stake in Kabanga Nickel, while Lifezone Metals will retain control of the project. Kabanga is one of the world's large high-grade nickel sulphide deposits. Phase 1 of the project is expected to produce about 350,000 mt of nickel concentrate annually, with associated copper and cobalt, and subsequent plans include building refining facilities to produce battery-grade nickel sulphate.

Macro:

(1) The Trump administration announced a new round of "the toughest ever" economic sanctions against Iran, and threatened economic action against any country with commercial ties to Iran.

(2) US Treasury Secretary Bessent said he is prepared to further expand the scale of repurchases of debt with higher financing costs, while the Trump administration will roll out a new fiscal measure to address borrowing costs that have hit multi-year highs.

Spot Market:

On August 21, the average price of SMM #1 refined nickel was 129,600 yuan/mt, down 650 yuan/mt from the previous trading day. In terms of spot premiums, the average for Jinchuan #1 refined nickel was 1,550 yuan/mt, flat from the previous trading day, while the range for domestically mainstream brand electrodeposited nickel was -100 to 500 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (2609) dipped in the night session but rebounded slightly in the morning session, closing the morning session at 128,860 yuan/mt, down 0.67%.

Currently, the US is expanding the scale of treasury bond buybacks, which is supportive for base metals from a macro perspective. However, LME and domestic inventories continue to show an accumulating trend, with visible inventory at historical highs. In the short term, the price range for the most-traded SHFE nickel contract is expected to be 125,000-130,000 yuan/mt.

Nickel Sulphate

As of this Friday, the average price of SMM battery-grade nickel sulphate declined.

Demand side, the market was generally mediocre mid-month, with some downstream enterprises mainly picking up goods under long-term contracts or still holding certain raw material inventories. Sentiment for spot order stockpiling was weak, and acceptance of nickel salt prices was low. Supply side, some upstream enterprises had high inventory levels, with plans to lower operating rates and seek shipments for destocking. Looking ahead, the market is expected to still focus on destocking this month, and prices are expected to remain under pressure overall before month-end.

Inventory side, the inventory index for upstream nickel salt smelters this week remained at 8.1 days, while the inventory index for downstream precursor plants fell from 10.7 days to 10.0 days, and the inventory index for integrated enterprises declined from 9.9 days to 9.7 days. In terms of buying and selling strength, the Willingness to Sell Sentiment Factor for upstream nickel salt smelters this week remained at 2.0, the Willingness to Buy Sentiment Factor for downstream precursor plants remained at 2.3, and the sentiment factor for integrated enterprises remained at 2.3. (Historical data can be queried by logging into the database)

NPI

The average price of SMM 10-12% high-grade NPI fell by 5.6 yuan/nickel unit WoW to 1,127.4 yuan/nickel unit (ex-factory, tax included), and the average price of the Indonesia NPI FOB index fell by $0.61/nickel unit WoW to $145.91/nickel unit. This week, overall trading in the high-grade NPI spot market remained sluggish, with insufficient market activity, and the market continued to be under pressure in a deadlock. The price spread between high and low nickel unit sources narrowed somewhat, and the premium level also pulled back. Demand side, affected by the downward transmission from the stainless steel industry chain, downstream steel mills' purchase willingness remained low. Some steel mills, with ample raw material inventory, further slowed down the procurement pace, and even suspended purchases. Steel mills generally favored pushing for lower prices, only considering entering the market when prices pulled back to low levels. Downstream psychological price levels kept moving down, with limited buy-side release. Actual orders were mainly scattered small lots, making it difficult to form large-scale transactions. Supply side, smelters had cost support, and most suppliers were not willing to sell at low prices. Meanwhile, some sellers expected the September forward market to improve and were unwilling to significantly lower their quotes. However, as the market weakened, the overall quotation center of sellers also moved down somewhat. Although the futures saw a temporary rebound during the period, the market was doubtful about the sustainability of the rebound, which did not drive actual spot buying. Market participants had clearly divergent views. The spot market for nearby months faced significant pressure, while some resource holders hoped for a recovery in the forward market. The gap between sellers' and buyers' psychological price levels never narrowed. In the short term, the market lacked upward momentum, and the market would remain in a deadlocked consolidation.

Stainless steel

This week, stainless steel futures consolidated at lows, with valuations pulling back after being impacted by Indonesia quota news. Although there was a temporary recovery, bulls lacked confidence. Spot prices followed the futures lower. Approaching the September-October peak season, end-user stockpiling was sluggish, and transactions were mainly driven by rigid demand. Supply side, production schedules in August ramped up, but weak demand hindered destocking, causing social inventory to keep rising and highlighting the supply-demand loose imbalance. Cost side, although finished products fell more than raw materials, smelting profits were compressed to losses, creating a hard floor for spot prices and limiting room for further declines. Overall, the market showed a pattern of "futures weak recovery, spot following futures lower, weak demand, rising inventory, and cost floor," resulting in a deadlock. In the short term, the lack of peak season demand, production schedule recovery, and inventory buildup constituted core bearish factors, but cost support had strengthened, and the market was likely to consolidate on a weak note. Going forward, focus should be on the sustainability of futures recovery, peak season stockpiling pace, steel mill production schedules, and inventory changes.

This week, stainless steel finished products and production costs both pulled back, causing steel mills to fall into losses. Based on 304 cold-rolled calculations, profit margins based on current and inventory raw material costs were -0.11% and -0.49%, respectively. On the nickel raw material side, high-grade NPI prices extended their decline. As stainless steel mills had completed stockpiling for the peak season and margins narrowed, purchasing activity was relatively low, and high-grade NPI lacked a cost-advantage. As of Friday, China’s tax-included landed price for Indonesian high-grade NPI with 10-12% grade fell by 4.5 yuan/nickel unit to 1,131.5 yuan/nickel unit. Stainless steel scrap prices pulled back on a subdued note. Dragged by both low futures levels and weaker high-grade NPI, coupled with narrowing steel mill profits, cautious procurement, and tax invoice issues, support from rigid demand weakened. As of Friday, the ex-tax price of mainstream 304 off-cuts in Shanghai fell by 150 yuan/mt to 10,300 yuan/mt. On the chrome raw material side, high-carbon ferrochrome prices held steady. Although firmer LME chrome ore prices narrowed producers’ margins and led to some suspensions and production cuts, transactions were sluggish and market expectations were relatively stable. As of Friday, mainstream high-carbon ferrochrome in Inner Mongolia was quoted at 7,925 yuan/mt (50% metal content).

Nickel ore:

Philippines market:

In terms of prices, nickel ore prices in the Philippines were largely steady this week. CIF China prices for Ni 1.3%, 1.4%, and 1.5% nickel ore were $46/wmt, $56.5/wmt, and $64.5/wmt, respectively, all flat WoW. Inventory at downstream smelters in China remained relatively sufficient; procurement was still mainly driven by rigid demand, and overall transactions were relatively light. High-grade ore prices were relatively firm, while low-grade ore continued to face some pressure amid ample supply and limited demand recovery. On the weather front, rainfall risks diverged across major nickel ore producing areas in the Philippines this week. Palawan had the highest rainfall risk, expected at about 40–50 mm, which could cause phased impacts on road transport in mining areas and vessel loading around the weekend. Zambales, located in western Luzon, also faced high rainfall risk under the influence of the southwest monsoon. Overall risk in Surigao was relatively mild, but intermittent rainfall around August 22–23 could cause localized disruptions to transport and shipment. Overall, weather impacts were mainly concentrated in localized logistics and were not enough to change the overall supply landscape. On supply and demand, the Philippines nickel ore market overall still showed a pattern of relatively loose supply and weak demand. Mine production and exports were expected to remain basically normal, with ample spot supply. Downstream inventory in China was high, with limited willingness to restock; purchases mainly met immediate production needs. Localized rainfall and shipping schedule delays might tighten spot supply on a phased basis, but the overall market impact was limited. Looking ahead, nickel ore prices in the Philippines are expected to consolidate on a subdued note over the coming week. High-grade ore is expected to remain relatively firm supported by stable NPI procurement demand, while low-grade ore continued to face dual pressure from ample supply and sluggish demand. With weather impacts gradually weakening, mine and port operations are expected to basically return to normal. Short-term price trends mainly depend on China's downstream restocking pace, shipment conditions at Philippine ports, and spot supply changes.

Indonesia market:

Price side, Indonesian nickel ore prices edged up this week. HMA for the second half of August was $16,960/mt, up $314/mt or 1.89% from the first half. On August 18, CIF prices for Ni 1.4%, 1.5%, and 1.6% nickel ore were $53.3/wmt, $60.8/wmt, and $65.8/wmt, respectively, and were basically stable on August 19. The price rebound provided some support, but ample supply and cautious procurement limited upside room. Weather side, rainfall in Morowali was limited, and mining, transportation, and port operations were expected to be basically normal; Halmahera had a relatively high rainfall risk, but no significant disruptions were seen for now, with overall impact on supply limited. Supply-demand side, nickel ore supply remained relatively ample, saprolite inventory edged up, and HPAL production ramp-up drove a decline in limonite inventory. Most smelters' inventories could still sustain about 2 months, with limited spot procurement demand. Policy side, the market was watching additional RKAB quotas. APNI suggested adding 30 million mt of strategic buffer quotas on top of the existing RKAB of about 270 million mt, bringing the total to about 300 million mt; ESDM emphasized that quota adjustments need to be assessed based on actual production, downstream demand, and supply-demand balance, and are not automatically relaxed. Meanwhile, the market was watching Indonesia's possible launch of a new HPM pricing formula this month. If implemented, it may adjust benchmark pricing for nickel ore of different grades and affect mine quotes and smelter procurement costs, with specific plan and implementation timeline yet to be confirmed by officials. Additionally, Indonesia plans to launch a mineral and strategic commodity exchange on January 1, 2027, which is expected to cover nickel, coal, and palm oil, aiming to establish domestic reference prices, and in the long term may enhance Indonesia's influence in nickel pricing and benchmark formation. Outlook, short-term nickel ore prices are expected to consolidate on a strong note, but upside room is limited. Going forward, focus will be on the approval progress of new RKAB quotas, the 30 million mt strategic buffer quota proposal, and adjustments to the HPM pricing formula.