October 8 Morning Meeting Minutes
Market hot topics:
Indonesia's Coordinating Minister for Downstreaming and Energy Transition, Bahlil, stated that if the global nickel market remains in oversupply, the Indonesian government is considering regulating the capacity utilization rate of nickel smelters. Bahlil said, "Even with 10 smelters, under market oversupply conditions, it does not mean all smelters must operate at full capacity. This will be the part we need to regulate." Under this proposal, smelter production will no longer necessarily run at full capacity based on existing capacity. The government will adjust smelting output according to global nickel supply and demand conditions to prevent oversupply from further pressuring nickel prices. Bahlil stated that the government is still calculating the price levels that could serve as the basis for adjusting smelting output.
Macro:
(1) Expectations for US Fed interest rate hikes have marginally cooled, but long-term rates hit multi-year highs again. Williams said there may be another rate hike later this year "but there is no need to rush to act." Barr, Musalem, and several other officials reiterated their hawkish stance. Market pricing for an October rate hike pulled back from around 70% to about 50%. However, the 30-year Treasury yield briefly broke above 5.6%, the highest since 2002, while the 10-year held steady at 5.23%. The US dollar index rose 0.19% to 101.38. The pressure from interest rates has not been lifted.
(2) US-Iran negotiations made little progress, and oil prices closed lower. Neither side was willing to concede. Overnight, US crude fell 3.95% to $88.94/barrel, and Brent crude fell 2.17% to $95.71. Geopolitical premiums pulled back in stages, but the Middle East conflict remains a tail risk for oil prices. The Reserve Bank of Australia raised rates by 25 basis points to 4.35% as expected, with a hawkish tone in its post-meeting statement.
(3) US economic data weakened: August JOLTS job openings fell to 7.079 million (the lowest in five months and the third consecutive month missing expectations). September consumer confidence dropped to its lowest since 2014. The job market's "low hiring, low layoffs, low mobility" rigidity persisted. Overnight, US stocks closed slightly lower (Dow -0.26%), and A-share turnover hit 1.41 trillion yuan, a new low for the year.
Spot market:
On September 30, the average price of SMM #1 refined nickel was 123,600 yuan/mt, down 1,100 yuan/mt from the previous trading day. In terms of spot premiums, the average premium for Jinchuan #1 refined nickel was 3,750 yuan/mt, up 50 yuan/mt from the previous trading day. The range for mainstream domestic brands of electrodeposited nickel was -200 to 500 yuan/mt.
Futures market:
The most-traded SHFE nickel contract (2611) opened lower and moved lower in early trading. As of the early session close, it reported 121,830 yuan/mt, down 1.00%.
Short-term outlook:
Although US-Iran negotiations pulled oil prices back, inflationary pressure has not eased. The interest rate suppression remains, with the 30-year Treasury yield breaking above 5.6% and the US dollar holding above 101. Combined with nickel's own high inventory and persistently weak demand, the overall trend remains under pressure. In the short term, the most-traded SHFE nickel contract is expected to trade in the range of 121,000-125,000 yuan/mt.
Nickel sulphate
As of Wednesday this week, SMM battery-grade nickel sulphate average price declined. Demand side, with the National Day holiday approaching, enterprises have largely completed raw material stockpiling for the holiday period, and transportation of new raw materials is about to be disrupted. Downstream players overall continued to hold off on spot purchases. Additionally, some downstream players have also reduced production schedules, leading to lower raw material demand and low acceptance of nickel salt prices. Supply side, some upstream enterprises are holding relatively high inventory levels and have plans to lower operating rates and seek shipments to destock, but the overall scale of production cuts is weaker than the expected demand reduction. Looking ahead, the market is expected to maintain a weak supply-demand balance 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 slipped from 8 days to 7.8 days, the downstream precursor plant inventory index declined from 11.6 days to 11.4 days, and the integrated enterprise inventory index rose from 9.8 days to 10.1 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 purchase sentiment factor slipped from 2.1 to 2.0, and the integrated enterprise sentiment factor held at 2.2. (Historical data can be queried in the database)
NPI
SMM 10-12% high-grade NPI average price fell 1.7 yuan/nickel unit WoW to 1,043.3 yuan/nickel unit (ex-factory, tax included). The Indonesia NPI FOB index average price fell $0.3/nickel unit WoW to $134.7/nickel unit. This week, with the National Day holiday approaching, trading activity in the high-grade NPI market visibly pulled back, with prices consolidating in a narrow range at low levels overall and wait-and-see sentiment rising in the market. Supply side, market supply is ample. Most suppliers maintained their original quotes for shipments, but willingness to quote gradually weakened as the holiday approached, and some traders and steel mills have already entered holiday mode ahead of schedule. Demand side, downstream steel mills have largely completed pre-holiday stockpiling, with weak purchase willingness and overall low psychological price levels. Acceptance of high-priced cargoes was insufficient, and transactions were concentrated in the low-end range. This week, a mainstream stainless steel mill purchased tens of thousands of mt at a delivered price of 1,040 yuan/nickel unit, further confirming the current low price center. Market divergence has narrowed compared with earlier, and spot prices are locked in range-bound trading, with limited downside but lacking strong support for an upward rebound. Some participants are concerned about continued inventory buildup after the holiday, believing that with ample raw material supply, the timing of any rebound may be delayed. The market overall is waiting for further demand-side guidance after the holiday.
Stainless Steel
This week, stainless steel mills continued to push for lower raw material prices, leading to marginal profit recovery and easing losses. The profit margin for 304 cold-rolled based on current raw material costs recovered to 1.53%, turning positive; the profit margin based on inventory raw material costs remained at -1.87%, with profitability pressure not yet fully cleared. Nickel-based raw materials remained weak but with narrowing declines. Before the National Day holiday, downstream trading was sluggish, and the market worried about concentrated arrivals after the holiday. Combined with rising expectations for production cuts at steel mills, NPI inventory was under pressure; disruptions from water shortages in Indonesia and phased restocking by steel mills provided support. On Friday, the tax-inclusive delivered price of Indonesian high-grade NPI edged down 3 yuan to 1,045 yuan/nickel unit. Stainless steel scrap prices consolidated and held steady. SHFE nickel weakened, but SS futures remained firm, underpinning spot prices. The weak peak season recovery and October production schedule pullback capped upside, while tight supply and substitution economics offset bearish factors, limiting downside. On Friday, the tax-exclusive price of 304 off-cuts in Shanghai was 9,700-9,800 yuan/mt. Chrome-based raw materials pulled back slightly. October high-carbon ferrochrome procurement prices from steel mills were lowered, and lower LME chrome ore prices reduced production costs. Although producers cut output, supply contraction was limited. On Friday, high-carbon ferrochrome in Inner Mongolia was quoted at 7,650-7,800 yuan/mt (50% metal content), down 100 yuan MoM. Overall, the market showed a pattern of firm finished steel, divergent raw materials, and recovering profits. In the short term, weak demand and continued expectations for production cuts will keep just-in-time procurement subdued, making it difficult for costs to provide strong support; finished steel lacks demand drivers, and the market is expected to maintain weak costs, consolidating prices, and slightly recovering profits.
This week, stainless steel social inventory ended its previous destocking trend, halting declines and building up overall. The inventory center rose again, with total inventory in the two core markets of Wuxi and Foshan increasing, highlighting industry inventory pressure. The September-October peak season recovery expectations were thoroughly disproven, with end-use demand remaining persistently weak. Pre-holiday stockpiling was largely completed, with no new concentrated restocking in the market, only sporadic just-in-time procurement. Actual transactions were weak, and destocking efficiency dropped sharply. Although SS futures remained firm and spot prices held steady, providing some sentiment support to the market, this could not offset the absence of end-use demand. Additionally, arrivals increased this week, with supply-side releases steadily expanding. Under the mismatch of weak demand and increased arrivals, the market returned to an inventory buildup trajectory. Overall, the failure of traditional peak season demand, sluggish pre-holiday transactions, and increased weekly arrivals were the core reasons for this week's halt in destocking and shift to inventory buildup. Firm futures and spot prices could not reverse the accumulation pressure. At this stage, the peak season recovery fundamentals have failed, end-use demand recovery has fallen short of expectations, and trading sentiment remains persistently weak. In the short term, weak demand will continue to dominate inventory trends. During the long holiday, end-user operations will stall and demand will be absent, potentially amplifying inventory buildup pressure further.
Nickel ore:
Philippine market:
Prices, Philippine nickel ore prices continued to weaken this week. CIF China prices remained stable, with Ni 1.3%, 1.4%, and 1.5% quoted at $45, $55, and $63.5/wmt, respectively; CIF Indonesia prices fell to $40/wmt for Ni 1.3% and $50/wmt for Ni 1.4%. Philippine mine FOB prices are expected to be lowered further by about $2/wmt. Downstream raw material inventories in China are currently relatively ample, estimated to last about 2 months, and spot purchases are mainly need-based. Meanwhile, ocean freight rates from the Philippines to China remain at high levels, raising the landed cost of imported ore and limiting the actual purchasing appeal of Philippine ore in the CIF China market even if FOB prices are reduced.
Weather, major nickel ore producing areas in the Philippines have recently been affected by the ITCZ and seasonal rainfall, with rain and thunderstorms in parts of Palawan, Visayas, and Mindanao. Zambales has been notably impacted by the rainy season, with mining, transportation, and berthing and loading at some mines restricted, reducing actual shipping capacity. The supply contraction has gradually become the main factor influencing the local market. By contrast, areas such as Palawan still retain some shipment capability, so overall supply has not yet seen a full-scale shortage.
Supply-demand and market sentiment, the decline in Zambales supply has not yet translated into clear price support, mainly because downstream inventories in China are relatively sufficient and high shipping costs have limited purchase willingness for imported ore. At the same time, weaker local nickel ore prices in Indonesia have further reduced the competitiveness of Philippine ore entering the Indonesian market. If Indonesian prices for 1.3-1.4% ore continue to fall, Philippine mines may need to further adjust FOB quotes to maintain transactions. In the short term, the Philippine market remains weak, with attention focused on the recovery of Zambales shipments, Palawan shipment conditions, and changes in ocean freight rates to China.
Indonesian market:
Prices, Indonesian nickel ore prices were generally weak this week. CIF Indonesia prices at main ports for Ni 1.2%, 1.3%, 1.4%, 1.5%, and 1.6% nickel ore were $26.5, $28.5, $51.8, $58.5, and $63.4/wmt, respectively. Among them, 1.2% limonite ore fell by $0.5/wmt from the previous period, while other grades remained stable for now. As additional RKAB quotas gradually enter the market and the new HPM is expected to be lowered by about $2/wmt, mine-side quotes remain under pressure.
Supply side, the supplementary RKAB for 2026 is being gradually released, and market attention has shifted from quota approvals to actual production and shipments. Newly added quotas will not immediately translate into spot supply, as mines still need to complete production preparations such as equipment, roads, inventory, and logistics, but if more mines resume normal production later, actual supply in Q4 still has room to increase.
Demand side, smelter raw material inventories are currently relatively sufficient and are expected to last about 2 months, so short-term restocking momentum is limited, and spot procurement is mainly to meet production needs. Ni 1.3–1.4% ore supply is relatively sufficient, while high-grade ore is relatively tight, and the supply-demand divergence between grades remains pronounced.
Regarding El Niño and water resources, Indonesia is currently facing persistent dry conditions and water shortages rather than the heavy rainfall impacts seen in the Philippines. Industrial water pressure has increased in nickel industry concentration areas such as Morowali, and has already begun to affect the operation of some smelting facilities. SMM survey shows that some RKEF production lines have seen operating rates drop to about 30–40% of normal levels since September 22, but this is not yet a full-scale production cut across the entire industrial park. The impact of water shortages on the nickel ore market is mainly reflected on the demand side. After RKEF production lines reduce loads, nickel ore consumption at affected lines will decline accordingly, and spot procurement demand from some smelters may also decrease. Given that current inventories are already relatively sufficient, if water resource constraints persist for a longer period, actual ore demand from the smelting side may weaken further than previously expected, thereby increasing downward pressure on ore prices.
Policy and market side, the gradual release of RKAB, the expected downward adjustment of the new HPM, and sufficient smelter inventories together limit the short-term upside for ore prices. Meanwhile, water resource constraints caused by El Niño are gradually transmitting from production condition issues to actual nickel ore demand. If some RKEF production lines continue operating at low loads, supply increases and demand decreases may act on the spot market simultaneously.
Looking ahead, the Indonesian nickel ore market is expected to remain weak in the short term, with focus on the pace of conversion of newly added RKAB into actual production and shipments, the final adjustment magnitude of the new HPM, and smelter inventory consumption. On the water resources front, continued observation is needed on the operating rates of affected RKEF production lines in Morowali and their actual impact on ore procurement volumes.
![[SMM Nickel Midday Review] Nickel prices gapped down below 120,000 on October 8, falling after the holiday as US Treasury yields and the dollar both rose during the break](https://imgqn.smm.cn/usercenter/WNjzM20251217171732.jpeg)
