[SMM Analysis] Downstream Maintains Cautious Purchasing, Intermediate Product Payables in the Doldrums This Week

Downstream maintained cautious procurement; intermediate product payables were in the doldrums this week

The MHP market supply-demand pattern remained loose this week, with nickel and cobalt payables staying weak. On the supply side, after sulphur replenishment in Q3, some producers saw a recovery in MHP output, while some traders also released inventory to a certain extent recently, lifting market availability. On the demand side, downstream nickel salt and cobalt salt prices remained sluggish. In particular, cobalt sulphate is currently difficult to monetize, and salt plants have relatively low acceptance of high-priced MHP, putting pressure on MHP payables. With supply rising and demand weak, MHP payables are likely to stay soft in the near term.

The high-grade nickel matte market was also in a supply-demand weak pattern. High-grade nickel matte currently holds a clear economic advantage over MHP, but on the supply side, mainstream suppliers have completed long-term order signing, leaving limited spot cargo available. On the demand side, constrained by downstream production line compatibility, actual consumption capacity is insufficient. Overall purchasing sentiment was weak, trading activity was low, and payables remained stable.

This week, sulphur prices (CIF Indonesia) fell to a range of $960–1,050/mt, averaging $1,005/mt, down $20/mt from last Friday's average of $1,025/mt. The market overall showed a pattern of high-level stalemate with a slow decline. Market supply was tight, but downstream procurement pace slowed noticeably. MHP producers resisted due to cost affordability issues, and prices edged lower amid the tug-of-war between sellers and buyers. Prices are expected to consolidate at highs next week. Attention should be paid to the meeting between the US and six countries including Saudi Arabia during the UN General Assembly on September 22 to discuss the war against Iran, which may affect expectations for Middle East sulphur supply chains.

On the nickel price front, nickel prices traced a deep V this week. At the start of the week, rate hike expectations sent nickel prices tumbling, while a technical rebound followed later in the week after bearish factors materialized. This week, MHP and high-grade nickel matte nickel prices consolidated along with nickel prices. In addition, MHP cobalt prices fell sharply due to lower cobalt payables. Overall, the intermediate product market is expected to be under pressure in the near term.