The average price of SMM 10-12% high-grade NPI fell WoW by 17.7 yuan/nickel unit to 1,095.5 yuan/nickel unit (ex-factory, tax included), and the average price of the Indonesia NPI FOB index fell WoW by $2.93/nickel unit to $141.14/nickel unit. This week, the high-grade NPI market continued to weaken, with the price center shifting steadily lower. Price negotiations between upstream and downstream intensified, and the market entered a phase of stagnant consolidation at lows.
At the start of the week, upstream and downstream price expectations diverged significantly. Suppliers resisted selling at low prices, but downstream buyers continued to push purchase prices lower. Acceptance of higher-priced cargoes was poor, with only a small number of transactions concluded at low offer levels. By the last two days of the week, multiple factors converged to pressure the market—ample supply recovery, weak end-use consumption, rising inventories, and subdued macro sentiment—triggering a price collapse. Downstream stainless steel market conditions were weak, and steel mills faced losses. Combined with generally sufficient raw material inventories, mills had little incentive to restock proactively. Most steel mills remained on the sidelines, and some enterprises suspended spot purchases while awaiting clearer market direction. Pessimism prevailed, with participants broadly bearish on the outlook. Stainless steel downstream order-taking was sluggish, and expectations of production schedule cuts for the 300-series continued to weigh on steel mills' raw material procurement demand. Some mills postponed purchase plans and awaited October market conditions. Port inventories also showed an increasing trend, raising shipment pressure on suppliers and further limiting upside flexibility in spot prices.
From the perspective of NPI-to-high-grade nickel matte conversion, the discount of high-grade NPI to refined nickel stood at 176.2 this week, with the discount widening slightly. This was mainly driven by the continued decline in NPI prices, which widened the spread between the two. Looking ahead to next week, NPI prices are expected to extend their downtrend, while nickel prices have support at the bottom. The discount of high-grade NPI to refined nickel may continue to widen, but this spread level is still not enough to drive conversion of NPI to high-grade nickel matte, as NPI still offers higher profitability.
This week, domestic high-grade NPI production costs declined somewhat. Lower Philippine nickel ore prices, combined with a pullback in coke prices, reduced smelting raw material costs. However, NPI selling prices fell significantly over the same period, dragging on profitability and narrowing profit margins for domestic smelters. In Indonesia, by contrast, coking coal and coke prices fluctuated at highs, pushing up auxiliary material costs and power generation costs simultaneously, lifting overall production costs. Coupled with persistently lower NPI prices, Indonesian smelters' profits were also squeezed. Smelting profitability in both regions showed a contracting trend.
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