9.23 Morning Meeting Minutes
Market hot topics:
According to SMM, due to the El Niño phenomenon, Indonesia has experienced dry weather, putting local production water supply under pressure and disrupting transportation conditions. NPI production at the IMIP industrial park in Indonesia may be affected in October, though specific production plans have not yet been clarified. Given current market inventory levels, the impact on the overall supply-demand pattern is expected to be limited in the short term. SMM will continue to track changes in water usage and production operations at the park.
Macro:
(1) President Xi Jinping will pay a state visit to the US from September 23 to 25, marking the first state visit to the US in 11 years and the second exchange of visits between the Chinese and US heads of state within half a year. Earlier, He Lifeng completed economic and trade consultations with Bessent and Greer in New York, with officials describing the talks as "candid, in-depth, and constructive," and held a dialogue on AI issues. The central parity rate of the yuan has been raised for nine consecutive days, with the onshore rate closing at 6.6955, the highest since July 2022. The outcome of the meeting has become the biggest variable for global markets this week.
(2) Oil prices plunged as geopolitical premiums partially faded. Expectations of US-Iran diplomatic engagement heated up (the Iranian president is traveling to the US today to attend the UN General Assembly), and Saudi Arabia increased loadings for export through the Strait of Hormuz after rerouting (7 supertankers loaded 14 million barrels on Sunday). Overnight, WTI tumbled 4.28% to $91.97/barrel, and Brent fell 3.32% to $95.99; COMEX gold dropped 0.99% to $4,381. However, US retail diesel prices broke through $6.5/gallon to a new high, the Moscow refinery halted operations after an attack, and Russia plans to extend its diesel export ban, leaving refined product tightness unresolved.
(3) According to SMM, due to the El Niño phenomenon, Indonesia has experienced dry weather, putting local production water supply under pressure and disrupting transportation conditions. NPI production at the IMIP industrial park in Indonesia may be affected in October, though specific production plans have not yet been clarified. Given current market inventory levels, the impact on the overall supply-demand pattern is expected to be limited in the short term.
Spot market:
On September 22, the SMM average price of #1 refined nickel was 126,150 yuan/mt, up 200 yuan/mt from the previous trading day. In terms of spot premiums, the average for Jinchuan #1 refined nickel was 3,850 yuan/mt, down 250 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 contract (2610) drifted higher in early trading, closing the morning session at 124,400 yuan/mt, up 0.70%.
Short-term outlook:
On the macro front, the slide in oil prices has eased pressure from rate-hike trades, but US Fed officials continue to strike a hawkish tone and expectations for an October rate hike remain. On the fundamental side, water resource disruptions in Indonesia continue to weigh on supply-side expectations, but nickel's own high inventory and weak demand pattern remain unchanged. In the short term, the most-traded SHFE nickel contract is expected to consolidate, with a range of 123,000-126,000 yuan/mt.
Nickel Sulphate
On September 22, SMM battery-grade nickel sulphate average prices edged down slightly.
Cost side, expectations for production cuts driven by water shortages in Indonesia stimulated a slight rebound in nickel prices, and spot production costs for nickel sulphate rebounded. Supply side, some producers held relatively high inventory levels and sought production cuts to destock, with overall supply edging down slightly. Demand side, approaching the holiday, some downstream enterprises suspended spot purchases and continued to rely mainly on long-term contracts, showing relatively low acceptance of nickel salt prices. Today, the Willingness to Sell Sentiment Factor for upstream nickel salt smelters stood at 2.1, the purchase sentiment factor for downstream precursor plants stood at 2.1, and the sentiment factor for integrated enterprises stood at 2.2 (historical data can be queried in the database).
Looking ahead, transportation will be hindered during the Mid-Autumn Festival and National Day holidays, and spot order market activity is expected to remain weak in the short term, keeping nickel sulphate prices under overall pressure.
NPI
September 22 news: The SMM high-grade NPI market sentiment factor stood at 1.79, up 0.01 MoM. The upstream sentiment factor for high-grade NPI stood at 1.84, flat MoM, while the downstream sentiment factor for high-grade NPI stood at 1.74, up 0.02 MoM. Approaching the holiday, trading sentiment in the NPI market diverged. Some traders chose to suspend quotations and halt offers, with wait-and-see sentiment rising. Market views diverged notably between bullish and bearish camps. Some traders believed current prices were relatively low and offered support, maintaining a bullish stance. However, oversupply pressure on the supply side persisted, and many market participants remained bearish on the longer-term outlook. Steel mills maintained a cautious procurement pace, and stainless steel faced considerable resistance in destocking, suppressing raw material purchase willingness. Some pig iron producers chose to suspend shipments due to low prices, and the tug-of-war between sellers and buyers continued.
Stainless Steel
According to SMM on September 22, SS futures consolidated, with momentum for further upward exploration appearing somewhat weak. As of the close, the most-traded SS contract settled at 13,745 yuan/mt. In the spot market, affected by the pause in SS futures gains, stainless steel spot quotes mostly held steady. Although the Mid-Autumn Festival and National Day holidays were approaching, pre-holiday stockpiling sentiment in the market was not active, and downstream purchases remained primarily need-based, with overall transactions sluggish.
SS most-traded futures contract. At 10:15 a.m., SS2611 was quoted at 13,745 yuan/mt, down 15 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi stood in the range of 490-740 yuan/mt. In the spot market, the average price of Wuxi cold-rolled 201/2B coil fell 25 yuan/mt. For cold-rolled uncut edge 304/2B coil, the average price in Wuxi remained flat, and the average price in Foshan remained flat. Prices for cold-rolled 316L/2B coil in Wuxi remained flat. For hot-rolled 316L/NO.1 coil, Wuxi quotes remained flat. Cold-rolled 430/2B coil prices in both Wuxi and Foshan remained flat.
This week, the market was dominated by an overall weak sentiment, with the nonferrous metals sector collectively hitting bottom, dragging SS futures down persistently, briefly dipping to a low of 13,290 yuan/mt. Following the US Fed's rate hike, previously accumulated macro headwinds were released intensively and largely exhausted, marginally easing market pessimism. SS futures stopped falling and stabilized, followed by a modest recovery, with momentum for further deep declines significantly weakening and the market consolidating at lows overall. The spot market continued its weak tone as the peak season failed to materialize, with end-use demand recovery falling far short of expectations and trading remaining persistently mediocre. The traditional "September peak season" rally has been thoroughly disproven, with no recovery growth emerging from downstream end-users. Coupled with low willingness to stockpile ahead of the Mid-Autumn Festival and National Day holidays, end-users maintained a just-in-time procurement model without concentrated restocking, leaving overall transactions sluggish and market confidence persistently weak. The inventory side showed marginal improvement, with supply-demand pressure easing somewhat. September steel mill production schedules were expected to pull back, marginally contracting supply growth pressure. Combined with persistently declining futures warrant inventories, spot transactions recovered slightly after futures stopped falling. These multiple factors drove a modest destocking of stainless steel social inventory this week, with the supply-demand surplus pattern slightly repaired. The cost and profit side continued to recover, with steel mill losses gradually easing. Against the backdrop of a weak finished steel market and persistently soft demand, steel mills showed a strong desire to bargain down raw material prices. During the week, core raw material prices such as NPI and stainless steel scrap accelerated downward, rapidly lowering the raw material cost center, effectively narrowing the price spread between finished steel and raw materials, continuously repairing the loss-making pattern at stainless steel mills, and providing phased release of industry profitability pressure. However, current cost support remained weak overall, with raw material prices moving down in tandem with finished steel, and bottom support was not firm, making it difficult to drive a trend reversal rebound in prices. Overall, this week's stainless steel market presented a game of macro headwinds materializing, futures repairing at lows, peak season demand being disproven, just-in-time demand remaining weak, inventory destocking modestly, and cost losses being repaired. In the short term, the failure of traditional peak season expectations and weak industry fundamentals remain the core constraints. Coupled with insufficient cost support, stainless steel prices are unlikely to break out of the low-level consolidation pattern. However, downside support is gradually emerging, with steel mill production schedules continuing to pull back, no significant social inventory buildup, macro headwinds exhausted, insufficient momentum for deep declines in futures, and spot prices already pulled back to yearly lows. Meanwhile, approaching the critical window for 2027 Indonesian nickel ore quota approvals, market expectations are gradually recovering, leaving limited room for further deep price declines, with prices most likely to continue consolidating weakly at lows.
Nickel ore:
Philippine market:
In terms of prices, Philippine nickel ore prices continued to weaken this week, with mainstream CIF China quotations lower than the previous period. Ni 1.3%, 1.4%, and 1.5% were quoted at $45, $55, and $63.5/wmt, respectively. Chinese downstream smelters still hold relatively sufficient raw material inventories, restocking demand remains weak, procurement is mostly need-based, spot transactions are generally sluggish, and prices lack clear support.
On the weather front, the Philippines has gradually entered the seasonal rainy season in its main nickel ore producing areas, with the impact particularly pronounced in Zambales. Zambales has seen heavier rainfall recently, and companies typically carry out seasonal shutdowns during this period, with plans to resume production in Q4. By contrast, Palawan has enjoyed better weather conditions earlier, and mines there have 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 reflect 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 part of the 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 near term. Chinese downstream inventories are relatively sufficient, and procurement remains primarily need-based, so the seasonal shutdown in Zambales is unlikely to fully translate into price support for now. For the Indonesian market, the situation is different: local nickel ore prices in Indonesia continue to weaken, and with RKAB supply expectations gradually easing, Philippine ore entering the Indonesian market faces greater price competition pressure.
On the pricing side, CIF Indonesia may come under more pronounced downward pressure than CIF China going forward. Although the seasonal shutdown in Zambales will reduce some Philippine supply, if Indonesian local 1.3–1.4% ore supply remains ample and prices continue to fall, Philippine miners may need to lower their offers or accept lower premiums to maintain competitiveness in the Indonesian market. In other words, the supply contraction brought by the rainy season and the decline in Indonesian local ore prices may offset each other to some extent, meaning reduced Philippine supply does not necessarily lead directly to higher CIF Indonesia prices.
Looking ahead, the Philippine nickel ore market is expected to show a pattern over the coming week of “reduced Zambales supply, sustained shipments from other mining areas, and continued price pressure.” After Zambales enters its seasonal shutdown, overall Philippine export supply is expected to gradually decline, but demand has yet to show clear improvement, and near-term price support remains limited. Meanwhile, local nickel ore prices in Indonesia continued to decline, and the new HPM formula further lowered benchmark prices for low-grade ore, which may continue to compress the price ceiling for Philippine ore in the Indonesian market. Going forward, focus will be on the duration of the Zambales rainy season shutdown, supplementary supply from Palawan and other mining areas, changes in Indonesian local ore prices, and the price spread between Philippine CIF Indonesia and Indonesian local ore.
Indonesia market:
In terms of prices, Indonesian nickel ore CIF prices edged lower this week. The latest Ni 1.4%, 1.5%, and 1.6% grades were quoted at $51.8, $58.5, and $63.4/wmt, down $0.6, $0.3, and $0.5/wmt from the previous period, respectively. Ni 1.2% prices held steady at $27/wmt. Smelter raw material inventories remain relatively sufficient, 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 for the second half of September fell to $16,698/mt, 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% grades stood at $24.89, $49.2, $53.83, $58.5, and $63.38/wmt, respectively. Among these, the Ni 1.2% HPM dropped by about 45% from the previous level, with the benchmark price for low-grade limonite ore moving significantly closer to market prices.
Supply side, market attention shifted further toward actual RKAB approvals and quota releases this week. Recent market reports indicated that several large nickel miners have received additional RKAB quotas, but the specific incremental volumes and final approval status have yet to be fully confirmed, so the market has not yet fully incorporated these potential increments into supply expectations.
Regarding Vale Indonesia, ESDM has approved the company's first-phase RKAB for 2026, and the company subsequently applied for additional production quotas. ESDM Minister Bahlil Lahadalia stated that Vale's quota was not previously cut; rather, the company applied for an increase on top of the already approved quota. The scale of the additional quota and the approval outcome remain subject to further government confirmation.
Demand side, smelter raw material inventories remain relatively sufficient, and spot purchases are primarily need-based. For high-grade ore, due to relatively limited local supply, procurement competition remains strong and prices are relatively firm; Ni 1.3–1.4% ore supply is relatively ample, with some demand continuing to be supplemented by Philippine imported ore. Overall, demand has yet to show clear improvement, and buyers still hold relatively strong bargaining power.
In terms of HPM premiums, HMA continued to edge lower, and with the new HPM formula reducing benchmark prices for low-grade ore, market acceptance of high-premium ore declined further. Especially for Ni 1.2% limonite ore, the new HPM is already significantly below previous levels, helping to reduce mine-side benchmark prices and related cost pressure. With sufficient inventory at smelters, restocking momentum remains limited in the short term, and the discount between spot prices and theoretical HPM prices is likely to persist.
On the policy front, RKAB remains the market's core focus. Recently, the market has shifted from waiting for overall policy expansion to focusing on approvals and actual shipments from 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 are expected to widen further. However, some of the additional quota information still comes from market sources, and the specific growth still needs further confirmation.
On the weather front, Indonesia's major nickel ore producing areas maintained generally dry conditions 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 the continued lack of rain also adds to water resource pressure in industrial parks. Currently, 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 widened somewhat compared with earlier. The market has reported that several large mines received additional RKAB quotas, and Vale has also applied for additional quotas, but the specific new additions still need confirmation. With sufficient smelter inventory and weak spot demand, ore prices still face some pressure in the short term. The new HPM formula further lowers the benchmark price for low-grade limonite ore. Going forward, focus on the actual additional RKAB volumes at large mines, Vale's additional quota approval, smelter restocking pace, and changes in HPM premiums.
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