[SMM Nickel Morning Meeting Summary] US Stocks Rebound, Macro Pressure Eases, the Most-Traded SHFE Nickel Contract Edges Up in Early Trading

September 21 Morning Meeting Notes

Market Hot Topics:

The average CIF China prices for mainstream grades of Indonesian nickel ore edged down: 1.2% Ni: CIF average price $27/wmt, unchanged; 1.4% Ni: CIF average price $51.8/wmt, down $0.6/wmt from the previous figure; 1.5% Ni: CIF average price $58.5/wmt, down $0.3/wmt from the previous figure; 1.6% Ni: CIF average price $63.4/wmt, down $0.5/wmt from the previous figure. The Indonesian nickel ore market remains in a wait-and-see mode, with continued market attention on subsequent RKAB approvals and quota adjustments. Meanwhile, Indonesia's Ministry of Energy and Mineral Resources (ESDM) has revised the nickel ore HPM pricing formula through Kepmen ESDM No. 363.K/MB.01/MEM.B/2026, effective September 15. This revision mainly lowers the correction factor for low-grade nickel ore, significantly reducing the HPM benchmark price for low-grade limonite ore and bringing it closer to current market prices. Under the revised formula, the HPM for 1.2% Ni nickel ore is approximately $24.89/wmt, down about 45% from the previous level. The Indonesian government stated that this revision aims to improve the economics of nickel ore raw material for smelters, and it will continue to evaluate the actual impact of the new formula.

Macro:

(1) After the rate hike landed, US stocks rallied across the board, with a "bad news exhausted" rally unfolding. Overnight, the Dow rose 0.61%, the S&P 500 rose 1.14%, the Nasdaq rose 1.69%, and the Philadelphia Semiconductor Index surged 3.14% (Arm up 8%, Intel up 7%, AMD/SanDisk up 6%); the 10-year Treasury yield pulled back from 5.02% to 4.94%, and the US dollar index edged down to 100.22. After the market digested the hawkish dot plot, risk appetite recovered, and European stocks closed higher as well.

(2) The Bank of Japan announced its decision at midday today, raising rates by 25 basis points to 1.25%, the highest policy rate since 1995 (31 years). With this, the US Fed, the ECB, and the BOJ have completed this round of "super central bank week" with three consecutive tightenings, while the Bank of England held steady but warned it would raise rates if the Middle East conflict pushes inflation higher.

(3) Oil prices pulled back as Middle East supply concerns eased. Saudi Arabia began repairing damaged pipelines and increased supply through ship-to-ship transfers, and Trump said the US is "hopefully approaching the end of the war with Iran" and will meet with GCC leaders on the sidelines of the UN General Assembly next week; overnight, WTI fell 1.31% to $101.09/barrel, Brent fell 0.95% to $104.80, and US oil opened lower with a gap of more than 4% this morning. Gold rebounded 1.82% to $4,342/oz.

Spot market:

On September 18, SMM #1 refined nickel averaged 125,750 yuan/mt, up 350 yuan/mt from the previous trading day. In terms of spot premiums, Jinchuan #1 refined nickel averaged 4,350 yuan/mt, up 100 yuan/mt from the previous trading day, while mainstream domestic brands of electrodeposited nickel ranged from 0 to 500 yuan/mt.

Futures market:

The most-traded SHFE nickel 2610 contract shot up and then pulled back in early trading, closing the morning session at 123,640 yuan/mt, up 0.62%.

Short-term outlook:

After the US Fed's rate hike landed, global risk appetite recovered, and macro pressure eased in phases. SHFE nickel's rebound momentum remained mild, and with nickel's own high inventory and weak demand pattern unchanged, the most-traded SHFE nickel contract price is expected to trade in the range of 122,000-126,000 yuan/mt in the short term.

Nickel sulphate

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

Demand side, affected by the pullback in downstream stockpiling sentiment, some downstream enterprises saw their operating rates decline this month, mainly picking up goods under long-term contracts, with weak spot order stockpiling sentiment and low acceptance of nickel salt prices. Supply side, some upstream enterprises held relatively high inventory levels and planned to lower operating rates and seek shipments to destock, but the overall scale of production cuts was smaller than the expected demand reduction. Looking ahead, the market is expected to maintain a supply-demand weak pattern in the short term, with destocking as the main theme, and prices are expected to remain under pressure overall.

Inventory side, this week the upstream nickel salt smelter inventory index held at 8 days, the downstream precursor plant inventory index fell from 12.2 days to 11.9 days, and the integrated enterprise inventory index held at 9.8 days. In terms of buying and selling strength, this week the upstream nickel salt smelter Willingness to Sell Sentiment Factor held at 2.1, the downstream precursor plant purchasing sentiment factor held at 2.1, and the integrated enterprise sentiment factor slipped from 2.3 to 2.2. (Historical data can be queried in the database)

NPI

The SMM 10-12% high-grade NPI average price fell 33.1 yuan/nickel unit WoW to 1,062.4 yuan/nickel unit (ex-factory, tax included), while the Indonesia NPI FOB index average price fell $4.06/nickel unit WoW to $137.08/nickel unit. This week, the high-grade NPI market continued to drift lower overall, with the tug-of-war between longs and shorts intensifying. Supply side, port inventory rose, market supply was ample, and some traders continued panic selling. Upstream holders had cost floors, and quotes diverged, with some parties holding firm near cost levels, but low-priced resources kept emerging. Demand side, downstream steel mills generally hold sufficient inventory, with weak purchase willingness, continuously pushing for lower purchase prices. Some enterprises have delayed or even suspended spot purchase plans. Prices continued to decline, downstream purchasing sentiment remained cautious, high-priced cargo faced significant transaction resistance, the price spread between buyers and sellers was difficult to narrow, spot transactions were limited to scattered small orders, overall market liquidity was weak, market pessimism intensified, market participants continued to lower their expectations for the market bottom, and views within the market diverged. Some participants believed prices still had downside, while some upstream players and traders believed prices were gradually approaching the bottom, with expectations of stabilization emerging. The market was still waiting for transaction confirmation of bottom support, and short-term market conditions were unlikely to recover significantly.

Stainless Steel

   This week, the stainless steel market was generally weak, with nonferrous metals collectively weakening, dragging SS futures down to 13,290 yuan/mt. After the US Fed's rate hike landed, earlier macro headwinds were released in a concentrated manner, market pessimism eased somewhat, futures stopped falling and stabilized with a slight recovery, further deep decline momentum weakened, and the market shifted to consolidating at lows. In the spot market, the traditional "September peak season" was completely falsified, and end-use demand recovery fell far short of expectations. Downstream lacked recovery growth, stockpiling willingness before the dual holidays was low, with only rigid demand and purchase-as-needed, no concentrated restocking, sluggish market trading, and weak confidence. The inventory side showed marginal improvement, steel mill production schedules for September pulled back, supply pressure contracted, futures warrants continued to decline, futures stabilization drove a slight recovery in spot transactions, social inventory saw slight destocking, and the loose supply-demand situation improved somewhat. On the cost and profit side, weak finished steel prompted steel mills to pressure raw materials, NPI and stainless steel scrap prices fell rapidly, raw material costs shifted lower, steel mill losses were alleviated, and profit pressure was released in stages. However, raw materials weakened in tandem with finished steel, cost bottom support was not solid, and was not enough to drive a trend-based rally. Overall, the market was in a game of macro headwinds exhausted, futures repairing at lows, but demand weak, inventory slightly destocking, and losses repaired. In the short term, the failed peak season, weak fundamentals, and insufficient cost support still suppressed market conditions, and prices were unlikely to break away from low-level consolidation. However, downside support was gradually emerging, with steel mill production cuts, no significant inventory accumulation, macro risks released, spot at yearly lows, and the approaching Indonesian nickel ore quota approval window bringing expectations of recovery, leaving limited room for further deep declines, with prices likely to maintain low-level weak consolidation.

  This week, stainless steel finished products and raw materials weakened in tandem, with pessimism shrouding the entire industry chain. Steel mills actively pushed for lower purchase prices, smelting profits recovered marginally, and the 304 cold-rolling profit margin based on current raw materials was -0.25%, with losses narrowing significantly, but based on inventory raw materials, it still showed a loss of -2.56%. Nickel-series raw materials continued to decline. Steel mills finished restocking, and procurement was sluggish. Combined with the peak season for finished steel falling short of expectations, high-grade NPI port inventories remained elevated. The tax-inclusive delivered price of Indonesian high-grade NPI with 10-12% grade fell by 34 yuan/nickel unit on the week to 1,051 yuan/nickel unit. Stainless steel scrap moved lower in tandem. Although its substitution advantage over high-grade NPI widened, weakening finished steel and steel mills cutting production schedules shrank rigid demand for raw materials, leaving transactions subdued. The tax-exclusive price of 304 off-cuts in Shanghai dropped by 200 yuan/mt to 9,700-9,800 yuan/mt. Chrome-series raw materials showed resilience. High-carbon ferrochrome was already at a yearly low, and cost support from chrome ore prices limited the downside. With steel mill tenders approaching, the market adopted a wait-and-see stance. Mainstream quotations for high-carbon ferrochrome in Inner Mongolia were basically flat at 7,800-7,900 yuan/50 base mt. Overall, finished steel weakened while raw material trends diverged, and steel mill losses narrowed somewhat. In the short term, demand is unlikely to improve, steel mills will continue to push for lower prices, cost support is weak, and prices will consolidate at lows.

Nickel ore:

Philippine market:

In terms of prices, Philippine nickel ore prices continued to weaken this week. Mainstream CIF China quotations declined from the previous period, with Ni 1.3%, 1.4%, and 1.5% quoted at $45, $55, and $63.5/wmt, respectively. Raw material inventories at Chinese downstream smelters remained relatively ample, and restocking demand was weak. Procurement was mainly need-based, overall spot transactions were sluggish, and prices lacked clear support.

In terms of weather, the Philippines has gradually entered the seasonal rainy season in major nickel ore producing areas, with Zambales particularly affected. Zambales has seen heavy rainfall recently, and companies typically carry out seasonal suspensions during this period, planning to resume production in Q4. In contrast, Palawan had relatively favorable weather conditions earlier, and mines there maintained strong shipment capability.

Therefore, Zambales should no longer be viewed simply as a short-term weather disruption but rather as a seasonal supply factor. As the rainy season continues, mine production, road transportation, and port loading may all be affected, and spot supply from Zambales is expected to gradually decline. However, other major producing areas such as Palawan can still provide some supply, so the current situation is more likely to manifest as a shift in supply structure and a slowdown in shipment pace rather than an immediate tightening of overall Philippine supply. The southwest monsoon is expected to continue affecting the western Philippines in mid-to-late September, and Zambales and other western areas still face rainfall risks.

In terms of supply-demand and market sentiment, the Philippine nickel ore market remains in a state of weak demand coexisting with localized supply tightening in the short term. Downstream inventories in China are relatively sufficient, and procurement remains mainly need-based, so the seasonal suspension in Zambales is unlikely to fully translate into price support for now. For the Indonesian market, the situation is different: Indonesian domestic nickel ore prices continue to weaken, and with RKAB supply expectations gradually easing, Philippine ore faces greater price competition pressure when entering the Indonesian market.

Price-wise, CIF Indonesia may face more significant downward pressure than CIF China going forward. Although the seasonal suspension in Zambales will reduce some Philippine supply, if Indonesia's local 1.3–1.4% ore supply remains ample and prices continue to fall, Philippine mines may need to lower offers or accept smaller premiums to maintain competitiveness in the Indonesian market. In other words, the supply contraction caused by the rainy season and the decline in Indonesia's local ore prices may offset each other to some extent, and reduced Philippine supply does not necessarily directly lead to higher CIF Indonesia prices.

Looking ahead, the Philippine nickel ore market is expected to show a pattern of "reduced Zambales supply, sustained shipments from other mining areas, and continued price pressure" over the coming week. After Zambales enters its seasonal suspension, the Philippines' overall export supply is expected to gradually decline, but demand has yet to improve significantly, leaving limited short-term price support. Meanwhile, Indonesia's local nickel ore prices continue to fall, and the new HPM formula further lowers the benchmark price for low-grade ore, which may continue to cap Philippine ore prices in the Indonesian market. Key factors to watch include the duration of Zambales' rainy-season suspension, supplementary supply from Palawan and other mining areas, changes in Indonesia's local ore prices, and the price spread between Philippine CIF Indonesia and Indonesia's local ore.

Indonesia market:

Price-wise, Indonesia's nickel ore CIF prices edged lower this week. The latest Ni 1.4%, 1.5%, and 1.6% grades were quoted at $51.8/wmt, $58.5/wmt, and $63.4/wmt, down $0.6/wmt, $0.3/wmt, and $0.5/wmt from the previous period, respectively. The Ni 1.2% price held at $27/wmt. Smelters currently still hold relatively ample raw material inventories, restocking willingness is weak, spot trading is sluggish, and ore prices overall lack clear upward momentum.

In terms of HMA and HPM, Indonesia's nickel HMA fell to $16,698/mt in the second half of September, down $35.33/mt from the first half of September, a decline of about 0.21%. Starting September 15, ESDM officially implemented the revised nickel ore HPM formula. The latest HPM for Ni 1.2%, 1.3%, 1.4%, 1.5%, and 1.6% stood at $24.89/wmt, $49.20/wmt, $53.83/wmt, $58.50/wmt, and $63.38/wmt, respectively. Among these, the Ni 1.2% HPM dropped by about 45% from the previous level, bringing the benchmark price for low-grade limonite ore significantly closer to market prices.

Supply-wise, market attention shifted further to actual RKAB approvals and quota releases this week. Recent market reports indicated that several large nickel miners had received additional RKAB quotas, but the specific incremental volumes and final approval status have not been fully confirmed, so the market has not yet fully incorporated these potential supply additions into supply expectations.

On Vale Indonesia, ESDM has approved the company's Phase 1 RKAB for 2026, and the company subsequently applied for an additional production quota. ESDM Minister Bahlil Lahadalia stated that Vale's quota was not previously cut; rather, the company submitted an increase request on top of the already approved quota. The scale of the additional quota and the approval outcome still await further confirmation from the government.

On the demand side, smelter raw material inventories remain relatively sufficient, and spot purchases are mainly need-based. High-grade ore faces relatively strong procurement competition due to limited local supply, keeping prices relatively firm; Ni 1.3–1.4% ore supply is relatively ample, with part of demand still supplemented by imported ore from the Philippines. Overall, demand has yet to show clear improvement, and buyers still hold relatively strong bargaining power.

On HPM premiums, HMA continued to edge lower, and the new HPM formula lowered the benchmark price for low-grade ore, further reducing market acceptance of high-premium ore. In particular, for Ni 1.2% limonite ore, the new HPM is already notably below previous levels, helping to lower mine-side benchmark prices and related cost pressure. With smelter inventories sufficient, restocking momentum remains limited in the near term, and the discount between spot prices and theoretical HPM prices is likely to persist.

On policy, RKAB remains the market's core focus. Recently, market attention has shifted from waiting for overall policy volume releases to tracking approvals and actual shipments at specific mines. If the additional quotas for several large mines are officially confirmed and converted into actual supply, Indonesia's nickel ore supply expectations for Q4 will further loosen. However, some information on additional quotas still comes from market channels, and the specific growth still needs further confirmation.

On weather, Indonesia's major nickel ore producing areas remained generally dry this week, with limited rainfall in Morowali, Konawe, and Obi, and no significant impact on mine production, transportation, or port loading. Dry weather is favorable for mine production and shipments in the short term, but persistently low rainfall also continues to increase water resource pressure in industrial parks. At present, water resource issues are mainly concentrated on the smelting side, and attention is needed on whether they will further affect nickel pig iron and stainless steel production.

Looking ahead, Indonesia's nickel ore supply expectations have loosened somewhat compared with earlier. The market has reported that several large mines received additional RKAB, and Vale has also applied for an additional quota, but the specific new volumes still need confirmation. With smelter inventories sufficient and spot demand weak, ore prices still face some pressure in the near term. The new HPM formula has further lowered the benchmark price for low-grade limonite ore. Going forward, key areas to watch include actual RKAB additions at large mines, approval of Vale's additional quota, smelter restocking pace, and changes in HPM premiums.