High-nickel pig iron prices have reached a record high, driven by improved supply and strong demand

This week, the market average price of SMM 8-12% high nickel pig iron (NPI) reached 1020 RMB per nickel point (ex-factory, tax included), an increase of 31.88 RMB per nickel point compared to last week. Meanwhile, the FOB index of Indonesian NPI also increased by $3.5 per nickel point. The price of high nickel pig iron rose sharply this week, reaching a new annual high of 1030 RMB per nickel point.

On the supply side, domestic smelters have seen improved profitability, which has enhanced production motivation. The restocking of some high-grade nickel ores has also led to an increase in metal production. In Indonesia, new nickel ore approvals have eased raw material shortages in smelters, and new production capacities are gradually being released, with an expected production increase.

In terms of demand, macroeconomic policies have affected the stainless steel industry post-National Day, coinciding with the year-end restocking phase in the end-user market. This has increased the enthusiasm of steel mills for purchasing raw materials, with a certain steel mill in South China setting a new high purchase price. Overall, the active restocking of raw materials by stainless steel mills, coupled with limited market spot supply, suggests that the price of high nickel pig iron is expected to remain stable to strong next week.

Additionally, this week, the average discount of high nickel pig iron compared to electrolytic nickel is 304.7 RMB per nickel point, a decrease of 42.7 RMB per nickel point from last week. The substantial rise in high nickel pig iron prices has broken through the annual high, further driven by concentrated purchases from a South China steel mill, supported by cost factors, leading to a continued strong performance in high nickel pig iron prices.

Regarding pure nickel, the uncertainty of the US election and geopolitical risks have led to gold prices reaching new highs; however, base metals are under pressure and have weakened, with nickel prices experiencing narrow fluctuations and retracement. This week, the discount of high nickel pig iron compared to electrolytic nickel has narrowed. In the short term, the newly approved quotas for Indonesian nickel ore, coupled with risk aversion due to a decline in US economic prosperity, could exert downward pressure on pure nickel prices. Meanwhile, the high nickel pig iron market is expected to continue to rise, maintaining a stable to strong price outlook, with the discount gap between high nickel pig iron and electrolytic nickel expected to narrow further next week.