October 9 Morning Meeting Minutes
Market Hot Topics:
Indonesia's Coordinating Minister for Downstreaming and Energy Transition, Bahlil, stated that if the global nickel market continues to be oversupplied, the Indonesian government is considering regulating the capacity utilization rate of nickel smelters. Bahlil said, "Even if there are 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 production according to global nickel market supply and demand conditions to avoid oversupply further pressuring nickel prices. Bahlil stated that the government is still calculating the price levels that could serve as the basis for adjusting smelting production.
Macro:
(1) The US Fed's September minutes confirmed a hawkish stance but hinted at no rush in October. All 19 policymakers unanimously supported a 25bp rate hike in September to 3.75%-4.00%, with the majority expecting one more hike within the year, but keeping each meeting open and decisions entirely dependent on data. CME showed the probability of holding rates unchanged in October rose to 79.5%, while the probability of a cumulative 25bp hike by December stood at 68%. During the long holiday, the 10-year Treasury yield broke above 5.36% intraday (a new high since 2002), and the US dollar index shot up to 102.27, approaching an 18-month high, putting global risk assets under pressure.
(2) US-Iran tensions escalated again, and the IEA accelerated reserve releases. Iran said it would soon blockade the "illegal" Strait of Hormuz shipping lane and insisted on its uranium enrichment red line, while Trump said military action against Iran "must be wrapped up." The IEA announced it would accelerate the release of approximately 100 million barrels of previously committed reserves (prioritizing diesel). Oil prices retreated after a rapid rise, with WTI closing down 0.97% at $88.33/barrel and Brent falling below $100 to close at $99.78. The Middle East remains a tail risk for oil prices.
(3) Risk assets saw "catch-up declines" during the long holiday: US stocks fell for three consecutive days (Dow -0.66%), spot gold hit a two-month low, falling below $4,100 intraday to close at $4,109.63/oz, and silver dropped 2.54%.
Spot Market:
On October 8, the average price of SMM #1 refined nickel was 122,200 yuan/mt, down 1,400 yuan/mt from the pre-holiday price (September 30). In terms of spot premiums, the average premium for Jinchuan #1 refined nickel was 4,000 yuan/mt, up 250 yuan/mt from pre-holiday levels, while mainstream domestic electrodeposited nickel brands ranged from -200 to 500 yuan/mt.
Futures Market:
The most-traded SHFE nickel 2611 contract opened lower with a gap after the holiday and trended lower in the morning session, closing at 119,520 yuan/mt as of midday, down 2.06% (relative to the pre-holiday settlement price).
Short-term outlook:
On the first trading day after the holiday, SHFE nickel broke below 120,000, playing catch-up with the risk asset repricing seen during the long holiday, when US Treasury yields broke above 5.36%, the US dollar surged past 102, and gold broke above 4,100. Looking ahead, nickel prices remain capped by high inventory and weak demand fundamentals, while cost support limits downside room. In the short term, the most-traded SHFE nickel contract is expected to trade in a range of 119,000-123,000 yuan/mt.
Nickel Sulphate
On October 8, SMM battery-grade nickel sulphate average price declined.
Cost side, US Treasury yields stayed high, LME nickel prices fell sharply during the holiday under macro pressure, and SHFE nickel played catch-up today, driving spot production costs for nickel sulphate sharply lower. Supply side, some producers held elevated inventory levels and sought production cuts to destock, with overall supply edging lower. Demand side, some downstream enterprises still relied mainly on long-term contract supply, with weak sentiment for building spot order inventory and relatively low acceptance of nickel salt prices. Today, the Willingness to Sell Sentiment Factor for upstream nickel salt smelters stood at 2.1, the purchasing sentiment factor for downstream precursor plants at 2.0, and the sentiment factor for integrated enterprises at 2.2 (historical data available via the database).
Looking ahead, spot order market activity is expected to remain subdued in the short term, with nickel sulphate prices under overall pressure.
NPI
October 8 news: SMM high-grade NPI market sentiment factor stood at 1.79, flat MoM; the upstream sentiment factor for high-grade NPI was 1.87, flat MoM; and the downstream sentiment factor for high-grade NPI was 1.72, flat MoM. As the National Day holiday ended, the high-grade NPI market saw its first trading day after the holiday, with nickel prices falling sharply and overall market sentiment turning cautious, extending the tug-of-war between upstream and downstream. Steel mills, some enterprises released post-holiday purchase plans, but their target purchase prices were low, mainly testing the downside, while most enterprises remained on the sidelines awaiting clearer market prices. Traders and smelters diverged in views, with some participants bearish on the outlook and expecting further downside room, while a few enterprises maintained higher offers. The price range gap between buyers and sellers was notable, making actual transactions difficult to conclude. Market trading has yet to see significant volume, with most participants holding back quotes and awaiting more transaction guidance. In the short term, prices are likely to consolidate on a subdued note.
Stainless Steel
According to SMM on October 8, on the first trading day after the National Day holiday, SS futures consolidated lower, dragged by SHFE nickel. By the close, the most-traded SS contract settled at 13,455 yuan/mt. Spot market, despite the notable decline in SS futures, restocking demand in surrounding markets after the holiday boosted trading activity, limiting the decline in stainless steel spot prices.
SS futures, the most-traded contract. At 10:15 a.m., SS2611 was reported at 13,530 yuan/mt, down 165 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 640-1,040 yuan/mt. In the spot market, the average price of Wuxi cold-rolled 201/2B coils was flat; for cold-rolled uncut edge 304/2B coils, the average price in Wuxi fell 25 yuan/mt, and the average price in Foshan fell 50 yuan/mt; the price of cold-rolled 316L/2B coils in Wuxi was flat; for hot-rolled 316L/NO.1 coils, Wuxi quotes were flat; cold-rolled 430/2B coils in both Wuxi and Foshan were flat.
Before the holiday, the stainless steel market overall showed a consolidating pattern of external weakness and internal stability, a falsified peak season, and a balance between longs and shorts. Expectations for a traditional September-October peak season recovery completely fell through, end-use demand remained persistently weak, downstream stocking before the long holiday basically wound down, the market saw only sporadic rigid demand transactions, overall trading was sluggish, and the demand side continued to weigh on spot prices. Futures moved independently and showed resilience, not deeply following the decline amid weakness in nonferrous metals and SHFE nickel, with strong support from low valuations, while spot prices overall remained firm. The cost side continued to improve, with upstream nickel-based and chromium-based raw material prices persistently pulling back, the price spread between finished products and raw materials repairing, reversing the earlier persistent losses, and steel mill production profits gradually returning. On the supply side, expectations for production cuts continued to build, industry supply contracted marginally, and combined with market prices at yearly lows, this effectively limited the downside for prices. On the inventory side, the trend shifted from decline to increase, the earlier sustained destocking pace came to an end, and affected by weak end-use digestion and increased market arrivals, social inventory accumulated again, with industry cargo pressure rebounding somewhat. Overall, weak demand and inventory buildup created bearish factors, while low valuations, production cuts providing a floor, and profit recovery created support, leaving the market in a balanced tug-of-war between longs and shorts and maintaining low-level consolidation. After the holiday, the stainless steel market is likely to continue a pattern of range-bound consolidation and weak supply-demand tug-of-war, with a low probability of one-sided gains or losses. The demand side remains the core constraint, as peak season recovery expectations have been falsified, end-use demand is generally weak, post-holiday work and production resumptions will proceed gradually, a concentrated restocking-driven surge is unlikely to appear, and the pace of rigid demand release will be slow. The supply and cost sides will continue to provide bottom support, with steel mill production cuts steadily implemented, supply pressure marginally easing, while the decline in raw material prices slows down and steel mill profitability recovers. On the inventory front, the long holiday production halt led to stagnant demand, and short-term post-holiday inventory buildup pressure will persist, continuing to cap the height of any rebound. Overall, after the holiday, stainless steel's upside is constrained by demand and inventory, while its downside is supported by costs, production cuts, and low valuations, making it difficult to either rise or fall significantly. Going forward, the key factors to track are the pace of end-user work resumptions and restocking, the implementation of steel mill production cuts, raw material price fluctuations, and the progress of inventory destocking.
Nickel ore:
Philippine market:
Price-wise, on October 8, Philippine nickel ore prices fell across all grades, with mainstream-grade CIF China prices seeing more notable declines: 1.3% Ni CIF China fell $2.5/wmt, 1.4% Ni CIF China fell $2/wmt, 1.5% Ni CIF China fell $2/wmt, and 1.8% Ni CIF China fell $2/wmt. This broad-based price reduction further signals a weakening Philippine nickel ore market, consistent with the recent decline in Indonesian nickel ore prices and the increasingly cautious stance on the purchasing side. CIF Indonesia prices dropped to $40/wmt for 1.3% Ni and $50/wmt for 1.4% Ni. Philippine mine FOB prices are expected to be revised down further by about $2/wmt. Downstream raw material inventories in China are currently relatively ample, estimated to last about two months, with spot purchases driven mainly by rigid demand. Meanwhile, ocean freight rates from the Philippines to China remain elevated, 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 lowered.
Weather-wise, major nickel ore producing areas in the Philippines have recently been affected by the ITCZ and seasonal rainfall, with rain and thunderstorms reported in parts of Palawan, Visayas, and Mindanao. Zambales has been notably impacted by the rainy season, with mining, transportation, and port loading at some mines restricted, reducing actual shipment capacity. The resulting supply contraction has gradually become the main factor shaping 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-wise, 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 dampened purchase willingness for imported ore. At the same time, weaker local nickel ore prices in Indonesia have further eroded 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 sustain transactions. In the short term, the Philippine market remains soft, with attention focused on the recovery of Zambales shipments, Palawan shipment volumes, and changes in ocean freight rates on the China route.
Indonesian market:
Price-wise, Indonesian nickel ore prices were generally weak this week. CIF Indonesia prices at main ports for 1.2%, 1.3%, 1.4%, 1.5%, and 1.6% nickel ore stood at $26.5, $28.5, $51.8, $58.5, and $63.4/wmt, respectively. Among them, the price of 1.2% limonite ore fell by $0.5/wmt from the previous period, while other grades remained stable for the time being. As newly approved RKAB quotas gradually enter the market and the new HPM is expected to be lowered by about $2/wmt, mine-side offers remain under pressure.
In terms of supply, the supplementary 2026 RKAB quotas are 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. However, if more mines resume normal production later, actual supply in Q4 still has room to increase.
On the demand side, smelter raw material inventories are currently relatively sufficient and are expected to last about two months, so restocking motivation is limited in the short term, and spot procurement is mainly to meet production needs. Supply of Ni 1.3–1.4% ore is relatively ample, while high-grade ore is relatively tight, and the supply-demand divergence between grades remains evident.
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 hubs 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 load, nickel ore consumption at the 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 restrictions 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.
In terms of policy and market conditions, the gradual release of RKAB quotas, the expected downward adjustment of the new HPM, and sufficient smelter inventories together limit the short-term upside for ore prices. Meanwhile, water constraints caused by El Niño are gradually transmitting from production condition issues to actual nickel ore demand. If some RKEF production lines continue to operate at low loads, increased supply and reduced demand may act on the spot market simultaneously.
Looking ahead, the Indonesian nickel ore market is expected to remain weak in the short term. Key areas to monitor include the pace at which newly approved RKAB quotas translate into actual production and shipments, the final magnitude of the new HPM adjustment, and the drawdown of smelter inventories. On the water resources front, continued observation is needed on the operating rates of affected RKEF lines in Morowali and their actual impact on ore procurement volumes.
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