[SMM Nickel Morning Meeting Summary] Expectations for US Fed interest rate hikes remain high, US bonds continue to strengthen, and the most-traded SHFE nickel contract falls under pressure in early trading

9.17 Morning Meeting Notes

Market Hot Topics:

Recently, Indonesia's Ministry of Energy and Mineral Resources (ESDM) issued Kepmen ESDM No.363.K/MB.01/MEM.B/2026, effective September 15, amending the nickel ore HPM pricing formula previously established under Kepmen ESDM No.144.K/MB.01/MEM.B/2026. This revision mainly lowers the nickel correction factor (CF) and cobalt payables for low-grade limonite ore. Taking 1.2% nickel ore as an example, the new HPM is $24.89/wmt, down $20.08/wmt from $44.97/wmt under the previous formula, a decline of about 45%, and below SMM's current actual delivered price of $27/wmt. Based on a 14% royalty rate, the royalty on 1.2% nickel ore under the new HPM is approximately $3.48/wmt, compared with approximately $3.78/wmt based on actual transaction prices. This adjustment helps narrow the price spread between the HPM and market prices and reduces the tax burden on low-grade limonite mines. Since actual market prices were already below the previous HPM, the impact of this adjustment on actual raw material procurement costs for HPAL smelters is expected to be limited.

Macro:

(1) The US Fed's rate decision lands tonight, with the probability of a rate hike rising to 94.5%. The FOMC meeting entered its second day (announcement at 2:00 a.m. Beijing time on the 17th), and CME FedWatch showed a 94.5% probability of a 25bp hike to 3.75%-4.00% (up from just 33.1% a month ago). The 10-year US Treasury yield hit 5.041% intraday, the highest since July 2007; the 20-year yield reached 5.441%, a new high since its reintroduction. A JPMorgan survey showed US Treasury investors' short positions surged by 10 percentage points in a single week to 19%, the largest increase since records began in 2019. Market focus is on the dot plot and Warsh's press conference: will this be a one-off adjustment or the start of a tightening cycle.

(2) Oil prices surged nearly 25% in two weeks as Saudi Arabia's 7 million bpd pipeline was disrupted. Saudi Arabia's east-west crude pipeline (capacity of 7 million barrels per day) was attacked and shut down, loadings at Yanbu port were suspended, and some late-September European cargoes were canceled, while Libya's Hamada-Zawiya pipeline was also disrupted simultaneously. Overnight, WTI jumped 4.03% to $105.48/bbl, Brent rose 2.90% to $108.75 (spot broke above $110), and US diesel futures broke through $5.26/gallon to a record high. Some strategists warned this could trigger "a series of rate hikes," with the path depending on oil prices.

(3) US stocks fell for a third straight day, while the dollar rose for a sixth consecutive session. The Dow fell 0.63% to 52,093 points, and the S&P 500 closed at its lowest since August; the US dollar index rose for a sixth straight day to 99.63; gold fell below $4,300 to $4,293.9/oz. US Treasury yields breaking 5% adds pressure on highly leveraged borrowers and AI-related companies.

Spot market:

On September 16, SMM #1 refined nickel averaged 123,200 yuan/mt, down 1,850 yuan/mt from the previous trading day. In terms of spot premiums, Jinchuan #1 refined nickel averaged 3,850 yuan/mt, up 950 yuan/mt from the previous trading day, while mainstream domestic electrodeposited nickel brands ranged 0-500 yuan/mt.

Futures market:

The most-traded SHFE nickel 2610 contract fell sharply in early trading, closing the morning session at 122,410 yuan/mt, down 1.35%, with an intraday low of 120,270 yuan/mt.

Short-term outlook:

The US Fed decision lands tonight. The rate hike itself is fully priced in; the real risk lies in the dot plot—if it signals continued tightening, it will trigger a fresh round of selling, otherwise there is room for repair. After the decision, if it turns out to be a "sell the fact" move, there may be a technical rebound, but the pattern of high inventory and weak demand remains unchanged, limiting the upside. In the short term, the most-traded SHFE nickel contract is expected to trade in the 121,000-126,000 yuan/mt range.

Nickel sulphate

On September 16, SMM battery-grade nickel sulphate average prices slipped.

Cost side, LME nickel saw a sharp inventory buildup yesterday. With macro already under significant pressure, nickel prices plunged again today, driving spot production costs for nickel sulphate lower. Supply side, some producers are holding elevated 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 contracts, with weak sentiment for building spot order inventories and relatively low acceptance of nickel salt prices. Today, the Willingness to Sell Sentiment Factor for upstream nickel salt smelters was 2.1, the purchasing sentiment factor for downstream precursor plants was 2.1, and the sentiment factor for integrated enterprises was 2.3 (historical data available in the database).

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

NPI

September 16 news: SMM high-grade NPI market sentiment factor was 1.77, up 0.02 MoM; the upstream sentiment factor for high-grade NPI was 1.86, up 0.01 MoM; and the downstream sentiment factor for high-grade NPI was 1.69, up 0.03 MoM. Today, the high-grade NPI market continued to drift lower overall. The sharp decline in nickel prices, coupled with the pullback in stainless steel, exerted significant bearish pressure on nickel pig iron. Market pessimism intensified, with participants continuously lowering their expectations for the bottom. Spot transactions faced increasing resistance, with some quotes failing to materialize, and many enterprises opted to suspend quoting and wait for market stabilization. Most participants believed there was still downside room for prices, and traders planned to consider bottom-fishing purchases only after prices fell to near production costs. Overall market trading was sluggish, with few actual transactions, and the market remained in a continuous bottom-seeking phase. Going forward, the focus will be on stainless steel finished product trends and actual transaction conditions for low-priced resources.

Stainless Steel

  According to SMM on September 16, SS futures saw wild swings during the day. Dragged by expectations for US Fed interest rate hikes and the decline in SHFE nickel, prices once plunged to 13,290 yuan/mt during the session, before the daytime session gradually recovered losses. By the close, the most-traded SS contract settled at 13,540 yuan/mt. In the spot market, spot stainless steel quotes fell in tandem with the deep decline in SS futures in the morning, but inquiries and transactions remained weak due to the sentiment of rushing to buy amid continuous price rise and holding back amid price downturn. At midday, as futures recovered losses and low-priced cargo stimulated interest, the circulation activity of market cargo improved.

  The most-traded SS futures contract. At 10:15 a.m., SS2610 was quoted at 13,415 yuan/mt, down 90 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 655-1,055 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi was flat; for cold-rolled uncut edge 304/2B coils, the average price in Wuxi fell 100 yuan/mt, and the average price in Foshan fell 75 yuan/mt; cold-rolled 316L/2B coil prices in Wuxi were flat; hot-rolled 316L/NO.1 coil quotes in Wuxi were flat; cold-rolled 430/2B coils in both Wuxi and Foshan were flat.

  This week, stainless steel futures overall extended a low-level subdued consolidation pattern. Disappointing peak-season expectations dominated futures sentiment, and bearish sentiment in the market continued to build. The terminal recovery remained elusive, and market expectations for a repair were completely dashed. Pessimistic sentiment was released in a concentrated manner, dragging SS futures to continue hitting bottom. Prices once fell to 13,680 yuan/mt during the week, marking a new stage low since February this year. The operating center of futures continued to shift lower, and the overall pattern remained in the doldrums. The spot market weakened in tandem with futures, with peak-season rigid demand absent and market trading sentiment persistently sluggish. Downstream end-users showed no concentrated stockpiling, maintaining a hand-to-mouth purchasing model, and destocking efficiency remained low. Dragged by persistently weak futures and demand falling short of expectations, stainless steel mills' resolve to hold prices firm continued to loosen, and market guidance prices and trader agent quotes were lowered successively. At the current stage, the market is mainly characterized by traders actively selling to reduce inventory, with generally weak willingness to purchase. End-user buying sentiment is cautious and wait-and-see, inquiries and transactions remain subdued, and the spot market shows pronounced weakness. On the inventory side, the market showed a stable inventory pattern under weak supply and demand. Although steel mills have lowered subsequent production schedules and marginal supply growth pressure has eased, terminal rigid demand remains persistently weak, and the supply-demand mismatch contradiction persists. This week, stainless steel social inventory showed no significant fluctuations and remained basically stable overall. Cost and profit sides remained weak and under pressure, with steel mills' losses not materially improving. This week, stainless steel product and raw material prices pulled back in tandem. The break below key support in product futures dragged spot prices lower, while raw material prices followed with adjustments. Although the decline in product prices was relatively contained this week and steel mills' earlier losses did not widen further, the industry's overall loss-making situation remained unchanged. Production profitability continued to face pressure, and the cost side provided only weak bottom support, not enough to drive a recovery in futures or spot prices. Overall, the stainless steel market this week showed a weak game pattern: peak season expectations fell through, end-user demand stayed sluggish, futures broke below lows, spot prices kept falling, inventory moved steadily, and losses kept the market under pressure. In the short term, the September peak season demand recovery falling short of expectations and spreading market pessimism remain the core bearish factors. The weak consolidation pattern in futures is hard to reverse, while slight cost-side support limits deep downside room.

Nickel ore:

Philippine market:

Prices: This week, Philippine nickel ore prices remained generally stable. Mainstream CIF China quotes were: Ni 1.3% at $32.5/wmt, Ni 1.4% at $41.5/wmt, and Ni 1.5% at $49/wmt. Overall, prices across grades changed little from the previous period. Chinese downstream smelters currently hold relatively sufficient raw material inventories, and restocking demand remains weak. Purchases were mainly to meet immediate production needs, with overall spot trading sluggish.

Weather: This week, weather risks in major Philippine nickel ore producing areas increased, with Zambales becoming the main disrupted region. Recent rainfall brought by the southwest monsoon (Habagat) may cause periodic disruptions to mining, land transport, and port loading in some mining areas. By comparison, operations in Palawan and other major producing areas remained largely normal. Overall, weather disruptions have not yet significantly changed the Philippine supply landscape, but short-term operational risks in Zambales have risen.

Supply: Philippine nickel ore supply remained relatively sufficient overall. Due to recent rainfall, production and loading at some Zambales mines may slow periodically, but this is not enough to create significant supply tightening for now. Philippine nickel ore exports are still mainly influenced by downstream demand from China and Indonesia, as well as weather conditions. Philippine nickel ore exports to Indonesia have increased notably in recent years, showing that the Indonesian market remains an important demand source for Philippine ore. In the short term, localized weather disruptions are mainly reflected in changes to shipment pace, with limited impact on overall supply. For the Indonesian market, CIF Indonesia prices for Philippine nickel ore face some downward pressure ahead. Due to the recent slight weakening of local nickel ore prices in Indonesia and relatively ample supply of Ni 1.3–1.4% ore, Indonesian smelters have become less accepting of prices for imported Philippine ore. With Indonesian local ore prices at low levels, Philippine miners may need to further lower their CIF Indonesia offers if they wish to remain competitive in the Indonesian market. The price spread between Philippine ore and Indonesian local ore will be an important factor in subsequent procurement decisions.

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, procurement is mainly need-based, and improvement in market transactions is limited. With supply pressure yet to ease significantly, buyers still hold strong bargaining power. Philippine nickel ore prices remained generally stable this week, reflecting that current demand-side support for prices is still limited. For the Indonesian market, weaker local nickel ore prices will further compress the import price space for Philippine ore, and price competition pressure may become more pronounced especially for medium- and low-grade ore. Looking ahead, Philippine nickel ore supply is expected to remain generally normal next week, but rainfall in Zambales may continue to disrupt production and loading at some mines, and some spot supply may be delayed in the short term, though this is not enough to change the overall loose supply pattern. On prices, CIF China prices are expected to remain relatively stable and in the doldrums in the short term. If downstream restocking demand still shows no clear improvement, some grades may still have room for downward adjustment. Meanwhile, as Indonesian local nickel ore prices weaken, CIF Indonesia prices may face stronger downward pressure than the CIF Chinese market. Going forward, focus on the recovery of weather conditions in Zambales, loading progress at Philippine mines, Indonesian local ore prices, and the restocking pace of downstream buyers in China and Indonesia.

Indonesian market:

Prices: Indonesian nickel ore CIF prices weakened slightly overall this week. Ni 1.2%, 1.4%, and 1.5% are currently quoted at $27/wmt, $52.4/wmt, and $58.8/wmt respectively, with Ni 1.2% down $1/wmt from the previous level, and Ni 1.4% and Ni 1.5% each down $0.3/wmt. Smelters' raw material inventory remains at relatively sufficient levels, restocking willingness is weak, spot transactions are generally sluggish, and upward momentum in nickel ore prices is limited.

HMA and HPM: In the second half of September, Indonesia's nickel HMA was $16,698/mt, down $35.33/mt from $16,733.33/mt in the first half of September. Affected by the slight downward adjustment in HMA, HPM also weakened in the second half of September. Among the current key price points, the market price corresponding to Ni 1.2% HPM is $27/wmt, down $1 from the previous level; Ni 1.4% is $52.4/wmt, down $0.3; and Ni 1.5% is $58.8/wmt, down $0.3. Overall, the adjustment in HMA this time is limited, and HPM prices have also only edged lower, so the overall impact on the market is relatively limited.

Supply side: This week, market attention on Indonesian nickel ore supply remained focused on the actual release of RKAB quotas. Market feedback shows that several large nickel miners have recently reported receiving additional RKAB quotas, indicating that production quotas at some mines are being gradually adjusted. The relevant information currently comes mainly from market sources, and the specific approval status and final additional quotas still need further confirmation, so the market has not yet fully factored the related growth into supply expectations. Previously, ESDM confirmed that the 2026 RKAB revision applications of some nickel miners had been approved, but did not disclose the specific additional volumes. Meanwhile, PT Weda Bay Nickel (WBN) received approval from Indonesian authorities this week and restarted mining operations. Eramet announced on September 10 that WBN has begun to gradually resume production after about four months of care & maintenance. The production resumption is still in a progressive stage, and the subsequent production ramp-up pace will depend on the redeployment of contractors and equipment, adjustments to the annual mining plan, and the completion of related administrative work. Eramet is currently unable to make a reliable estimate of nickel ore production and sales volumes for the remainder of 2026.

Demand side: Smelters hold relatively sufficient raw material inventories, and spot purchases remain mainly need-based. For high-grade ore, local supply is relatively limited, so procurement competition remains strong and prices are relatively firm; by contrast, Ni 1.3-1.4% ore supply is more ample, with part of demand continuing to be supplemented by imported ore from the Philippines. Overall, price performance still diverges somewhat across different nickel ore grades. On HPM premiums: After HMA edged further lower in the second half of September, market acceptance of high-premium ore remained low. Current spot transaction prices for limonite ore are still clearly below the theoretical HPM price, and HPAL enterprises have limited incentive to restock given sufficient raw material inventories. At the same time, the dry season is favorable for mine production and shipments, and supply-side disruptions are relatively weak, which also puts pressure on HPM premiums. If RKAB quotas at large mines are further implemented, buyer bargaining power may continue to strengthen, and the discount between actual transaction prices for limonite ore and theoretical HPM prices could widen further.

Policy side: This week, RKAB remained the main market focus. Compared with the previous period of simply waiting for policy-driven quota releases, the market is now paying attention to RKAB approvals at specific mines and actual shipment conditions. Recent market reports indicate that several large mines have obtained additional quotas. If these are further confirmed and converted into actual supply, they will improve expectations for Indonesia's nickel ore supply in Q4. Meanwhile, WBN's approval to resume production has further reinforced expectations of supply-side improvement. However, the government has previously emphasized that RKAB adjustments require formal evaluation, and an enterprise submitting an adjustment application does not necessarily mean approval will be granted. Therefore, current market reports still need further verification. In addition, the government has recently paid greater attention to miners' unpaid PNBP obligations and reclamation duties in RKAB approvals. Enterprises with outstanding payments or unresolved obligations may see their RKAB approvals affected. As a result, subsequent actual supply releases depend not only on new RKAB quotas but also on whether the relevant mines can fulfill government requirements and obtain final approval.

Weather: This week, Indonesia's major nickel ore producing areas maintained generally dry conditions. Rainfall in Morowali, Konawe, and Obi was limited, and mining production, transportation, and port loading were not significantly affected overall. Dry weather is favorable for mine shipments in the short term, but persistently low rainfall has also increased water resource pressure on industrial parks such as IMIP. Currently, market attention on water resource issues is mainly focused on the smelting side, and further observation is needed to see whether it will affect nickel pig iron and stainless steel production. On the mining side, no obvious production suspensions due to water shortages have been seen so far.

Looking ahead, supply expectations for Indonesia's nickel ore market have turned somewhat looser in the short term. WBN has received approval and begun a gradual production resumption, while signs have emerged that several large mines have obtained additional RKAB quotas. If the relevant information is subsequently confirmed, supply pressure in Q4 may increase further. With demand showing no significant improvement and smelter inventories still relatively sufficient, ore prices are expected to remain in the doldrums. Going forward, the market will focus on the actual implementation of large miners' RKAB quotas, the impact of unpaid obligations on approvals, WBN's production resumption progress, smelter restocking pace, and changes in HPM premiums.