[SMM Nickel Morning Meeting Summary] Middle East supply risks intensify, oil prices rise, the most-traded SHFE nickel contract opens lower and moves lower in early trading

9.9 Morning Meeting Minutes

Market hot topics:

Canada plans to impose additional tariffs of 15% to 50% on hundreds of US goods starting September 8, with the tariff rate on steel products raised from 25% to 50%, matching the scale of US tariffs on Canada in terms of countermeasures.

Macro:

(1) Oil prices hit a six-week high as Middle East supply risks intensify. Saudi Aramco oil facilities were attacked on Monday, and over the weekend the US and Iran struck each other's tankers while Iran warned it would establish a "restricted zone" outside the Strait of Hormuz. WTI settled up 1.33% at $92.70/bbl, and Brent rose 1.37% to $95.79/bbl. The OPEC+ meeting on Sunday kept October production policy unchanged. US stock and Treasury spot markets were closed for the Labor Day holiday.

(2) The yen surged to a seven-month high, and the US dollar fell below the 99 mark. The market is pricing in a 75% probability of a 25 bp rate hike by the Bank of Japan at its September 18 meeting, with USD/JPY down 1.22% to approach the 154 level. The US dollar index settled down 0.26% at 98.91. Traders have fully priced in a 25 bp rate hike by the European Central Bank this Thursday to 2.50%.

(3) Focus this week: Friday's US August CPI will determine whether the Fed hikes rates in September. The market is currently pricing in a roughly 60% probability of a hike, with Thursday's PPI serving as a precursor. UBS has newly shifted to expect the Fed to hike rates by 25 bp each in September and December. Domestically, the central bank's gold reserves rose to 76.73 million ounces at end-August, marking 22 consecutive months of increases.

Spot market:

On September 8, the SMM average price of #1 refined nickel was 127,850 yuan/mt, down 650 yuan/mt from the previous trading day. In terms of spot premiums, the average for Jinchuan #1 refined nickel was 1,750 yuan/mt, up 100 yuan/mt from the previous trading day, while mainstream domestic brands of electrodeposited nickel ranged from -200 to 500 yuan/mt.

Futures market:

The most-traded SHFE nickel contract (2610) opened lower and moved lower in early trading, closing the morning session at 127,180 yuan/mt, down 0.55%.

Short-term outlook:

Nickel prices remain dominated by fundamentals of high inventory and weak demand, with cost support providing a floor. Market sentiment is cautious ahead of Friday's US August CPI release. In the short term, the most-traded SHFE nickel contract is expected to trade in the range of 126,000-130,000 yuan/mt.

Nickel sulphate

On September 8, the SMM average price of battery-grade nickel sulphate held steady.

Cost side, macro rate-hike pressure combined with weak fundamentals has kept nickel prices under pressure and moved lower, pushing down the immediate production cost of nickel sulphate. Supply side, some producers are holding relatively high inventory levels and seeking production cuts to destock, with overall supply edging slightly lower. Demand side, some downstream enterprises still rely mainly on long-term contract supply, with weak sentiment for building inventory through spot orders and relatively low acceptance of nickel salt prices. Today, the Willingness to Sell Sentiment Factor for upstream nickel salt smelters stood at 2.0, the procurement sentiment factor for downstream precursor plants was 2.2, and the sentiment factor for integrated enterprises was 2.3 (historical data can be queried in the database).

Looking ahead, spot order market activity is expected to remain weak in the short term, with nickel sulphate prices under overall pressure.

NPI

September 8 news: The SMM high-grade NPI market sentiment factor was 1.74, down 0.01 MoM. The upstream sentiment factor for high-grade NPI was 1.83, down 0.01 MoM, while the downstream sentiment factor for high-grade NPI was 1.65, flat MoM. The high-grade NPI market remains in a standoff, with the price gap between upstream and downstream widening further. Steel mill losses combined with sluggish stainless steel market conditions have kept downstream procurement intentions under downward pressure. Many steel mills hold sufficient inventory and have opted to pause purchases and wait. On the iron producer side, there is resistance to low prices, with some enterprises slowing shipments and unwilling to sell heavily at low levels. A clear gap remains between the psychological price levels of upstream and downstream. However, bearish sentiment is strong in the market, with most participants expecting prices to move below 1,090 or even 1,100 yuan/mt Ni. Spot liquidity is weak, and the market has entered a phase of stalemate and consolidation at lows.

Stainless Steel

According to SMM on September 8, SS futures returned to a downtrend. After the night session opened, prices fell rapidly, with the intraday low briefly touching 13,750 yuan/mt. By the close, the most-traded SS contract settled at 13,830 yuan/mt. In the spot market, dragged by the renewed decline in SS futures, confidence in the stainless steel market weakened further. Around midday, steel mill agents proactively lowered quotes to boost shipments, driving spot stainless steel quotes further down.

The most-traded SS futures contract. At 10:15 a.m., SS2610 was quoted at 13,815 yuan/mt, down 80 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 55-855 yuan/mt. In the spot market, the average price of Wuxi cold-rolled 201/2B coil was flat; for cold-rolled uncut edge 304/2B coil, the average price in Wuxi was flat, and the average price in Foshan was flat; the price of cold-rolled 316L/2B coil in Wuxi was flat; for hot-rolled 316L/NO.1 coil, the quote in Wuxi was flat; cold-rolled 430/2B coil in both Wuxi and Foshan was flat.

This week, stainless steel futures extended their weak trend overall and broke down further. The traditional "September peak season" consumption period has officially begun, but expectations for demand recovery have fallen through. Market sentiment has turned pessimistic and bearish, with SS futures under pressure and weakening. During the week, the intraday low briefly dipped below 13,700 yuan/mt, and the market valuation center continued to pull back, with bearish sentiment dominating. The spot market weakened in tandem with futures, with no pre-peak-season rally emerging and the supply-demand imbalance intensifying further. The market has now entered the traditional peak consumption window, but downstream end-users have not shown concentrated stockpiling activity. Rigid demand remains sluggish, and overall market trading is muted. Inventory side showed structural divergence. This week, futures remained persistently low, and warrant inventory steadily pulled back, driving a slight decline in stainless steel social inventory. However, fundamental pressure has not materially eased. Steel mill production schedule cuts were limited, overall capacity stayed at high levels, and end-user rigid demand remained absent, resulting in low destocking efficiency. Overall industry inventory pressure stayed high, and the loose supply-demand landscape continued. Cost and profit pressures were fully evident, with steel mill losses taking shape. This week, stainless steel product and raw material prices pulled back in tandem, but product prices fell more than raw materials due to futures drag, pushing the industry into losses. Steel mill smelting margins narrowed. With profitability under pressure, steel mills' desire to bargain down nickel raw material prices continued to strengthen, in turn pressuring raw material prices and forming a negative cycle of falling product prices, losses, and raw material price suppression. Overall, this week's stainless steel market showed a weak game pattern of peak-season expectations falling through, sluggish end-user rigid demand, futures breaking down, spot prices following declines, inventory structural divergence, and steel mill losses. In the short term, the failure of peak-season demand recovery, spreading market pessimism, high steel mill production schedules, and bear-dominated futures constitute core bearish factors, keeping the market weak. Going forward, focus on the pace of SS futures stopping falling and recovering, downstream peak-season rigid demand realization and stockpiling progress, steel mill production schedule adjustments, raw material-product price spread changes, and inventory destocking pace.

Nickel ore:

Philippines market:

Prices: This week, Philippine nickel ore prices were generally stable. Mainstream CIF China quotes were $46/wmt for Ni 1.3%, $56.5/wmt for Ni 1.4%, and $64.5/wmt for Ni 1.5%, all flat WoW. Chinese downstream smelters had relatively sufficient raw material inventory, restocking demand remained weak, and purchases mainly met immediate production needs, with overall spot trading sluggish. High-grade ore prices were relatively firm, while low-grade ore still faced some pressure amid ample supply and limited demand recovery.

Weather: This week, weather risks in major Philippine nickel ore producing areas increased, with Zambales becoming the main disruption area. On September 4, the southwest monsoon (Habagat) brought heavy rainfall to Zambales, which may cause short-term phased impacts on mining, land transport, and port loading. In contrast, Palawan and other major producing areas continued to operate relatively normally. Overall, weather disruptions have not significantly changed the overall Philippine supply landscape, but short-term operational risks in Zambales have increased.

Supply side, Philippine nickel ore supply remained relatively ample overall. Affected by recent heavy rainfall, Zambales production is expected to slow down in phases. Overall, short-term supply may face some weather disruptions, but not enough to create a significant supply tightening. Philippine nickel ore exports remain mainly influenced by downstream demand from China and Indonesia, as well as rainy season weather. Philippine ore exports to Indonesia already increased notably in H1, indicating that the Indonesian market remains an important demand source for Philippine ore.

For the Indonesian market, CIF Indonesia prices for Philippine nickel ore face some downward pressure ahead. As Indonesian nickel ore prices were at relatively low levels in September, especially with ample supply of Ni 1.3–1.4% ore, Indonesian smelters' price acceptance for imported Philippine ore has declined. With local Indonesian ore prices on the low side, Philippine miners may need to further lower their CIF Indonesia offers to remain competitive in the Indonesian market. The price spread between Philippine ore and Indonesian local ore will be a key factor in future procurement decisions. Meanwhile, export demand for Philippine ore to Indonesia remains resilient, with Indonesia importing approximately 8.57 million mt of nickel ore from the Philippines in H1 2026, up 65.1% YoY, mainly flowing to areas such as Weda, Morowali, and Kendari.

In terms of supply-demand and market sentiment, the Philippine nickel ore market remains in a pattern of relatively loose supply and weak demand. Chinese downstream smelters hold relatively sufficient inventory, with procurement mainly need-based, and market transactions have seen limited improvement. With supply pressure yet to ease notably, buyers still hold strong bargaining power. High-grade ore remains relatively firm due to stable procurement demand from NPI smelters, while low-grade ore continues to face dual pressure from ample supply and weak demand. For the Indonesian market, low local nickel ore prices will further compress the import price space for Philippine ore.

Looking ahead, Philippine nickel ore supply is expected to remain generally normal over the coming week, though heavy rainfall in Zambales may continue to disrupt production and loading at some local mines. Some spot supply may be delayed in the short term, but this is not enough to alter the overall loose supply pattern. On prices, CIF quotes to the Chinese market are expected to remain in the doldrums, while CIF Indonesia prices face greater downward pressure. If Indonesian local nickel ore prices remain low, Philippine miners may need to further cut CIF Indonesia offers to sustain procurement demand. Key areas to watch include weather recovery in Zambales, loading progress at Philippine mines, Indonesian local ore prices, and the restocking pace of downstream buyers in China and Indonesia.

Indonesian market:

On prices, Indonesian nickel ore CIF prices remained generally stable this week, with Ni 1.4%, 1.5%, and 1.6% quoted at $52.75/wmt, $59.2/wmt, and $64.1/wmt respectively, with limited overall changes from previous levels. Smelter raw material inventories remain relatively sufficient, restocking willingness is weak, spot transactions are generally sluggish, and nickel ore prices have limited upward momentum.

For HMA, Indonesia’s nickel HMA for the first half of September fell to $16,733.33/mt, down $226.67/mt from $16,960/mt in the second half of August, a decline of about 1.33%. Affected by this, HPM for the first half of September was lowered accordingly, with Ni 1.4%, 1.5%, and 1.6% falling to $54.07/wmt, $58.75/wmt, and $63.64/wmt, respectively. HMA and HPM weakened simultaneously, further lowering benchmark pricing at the mine level and reducing smelters’ acceptance of high-priced ore.

Supply side, Indonesia’s main nickel ore producing areas are currently in a relatively dry phase of the dry season, with limited rainfall, and mining, transportation, and port loading remain generally normal. Current weather conditions are favorable for mine production and shipments, and weather-related supply disruptions are weak. As the dry season continues, if RKAB quotas are further released, market supply expectations still have room to improve.

Demand side, smelter raw material inventories are relatively sufficient, and spot purchases remain mainly need-based. For high-grade ore (Ni 1.45% and above), local supply is relatively limited, procurement competition remains strong, and prices are relatively firm; while supply of Ni 1.3–1.4% ore is more ample, with some demand still supplemented by imported ore from the Philippines. Overall, price performance across different nickel ore grades remains clearly differentiated.

For HPM premiums, after the September HMA decline, market acceptance of high-premium ore has further decreased. Current spot transaction prices for limonite ore remain clearly below theoretical HPM prices, and HPAL enterprises have limited restocking momentum given sufficient raw material inventories. At the same time, the dry season is favorable for mine production and shipments, reducing supply-side disruptions, all of which put pressure on HPM premiums. If subsequent RKAB approvals and quota releases further improve supply expectations, buyer bargaining power may continue to strengthen, and the discount between actual transaction prices for limonite ore and theoretical HPM prices may widen further.

Policy side, the market is still waiting for subsequent RKAB approvals and actual supply releases. Current market focus has shifted from quota expectations alone to actual quota implementation and the pace of mine shipments. Meanwhile, Indonesia implemented new DHE SDA rules from September 1, under which eligible mining export enterprises can apply more flexible foreign exchange retention arrangements, and 64 mining export enterprises currently meet the relevant conditions. This policy mainly eases cash flow pressure for eligible miners, with limited short-term impact on actual nickel ore supply, but it may improve capital turnover and sales flexibility for some export enterprises.

Looking ahead, Indonesia's nickel ore prices are expected to remain in the doldrums in the short term. High-grade ore is supported by supply constraints, keeping prices relatively firm; low-grade ore and limonite ore continue to be pressured by ample inventory, weak demand, and the HMA downgrade. After the September HMA decline, the theoretical HPM price will move lower accordingly, and further narrowing of the HPM premium will remain a key development in the limonite ore market. If RKAB supply is further released going forward while HPAL restocking demand fails to recover significantly, the discount between spot prices and theoretical HPM prices may continue to widen. The market will subsequently focus on RKAB approvals and actual quota releases, smelter restocking pace, HPM premium changes, and high-grade ore supply conditions.