[SMM Analysis] Sulfur and HPM Impacted the Market, MHP Payables Rose, and High-Grade Nickel Matte Remained Stable

The MHP market continued its weak supply-demand pattern this week, with nickel coefficients rising while cobalt coefficients held steady. Supply side, Indonesia adjusted its HPM formula, creating expectations for some cost increases in laterite ore for HPAL, and combined with expectations for production cuts at some producers due to sulphur supply deficits, overall MHP supply was expected to tighten. Demand side, downstream nickel salt prices were generally weak, and nickel salt smelters showed relatively low acceptance of high-priced MHP. However, as nickel prices held up well, purchasing demand from refined nickel enterprises persisted, supporting the strengthening of MHP nickel coefficients. Under the influence of tight supply-demand expectations, the market is expected to hold up well in the short term.

The high-grade nickel matte market was also in a weak supply-demand pattern. Currently, high-grade nickel matte holds a clear cost advantage over MHP, but on the supply side, major suppliers have completed long-term contract order signing, leaving limited available spot cargo. On the demand side, actual consumption capacity was constrained by downstream production line compatibility. Overall purchase sentiment was weak, trading activity was low, and coefficients remained stable.

Sulphur market, the international sulphur market saw continued supply tightening, pushing prices further higher. Middle East geopolitical tensions showed no signs of easing, with no clear timetable for the resumption of navigation through the Strait of Hormuz. Combined with Turkey's export ban and the extension of Russia's ban, supply continued to tighten. Given that the magnitude of supply contraction far exceeded demand contraction, the strong price pattern was difficult to reverse. Sulphur prices are expected to stay high and further push up downstream sulphuric acid and new energy material costs. Continued attention is needed on geopolitical developments and the recovery of transportation routes.

Nickel prices, Indonesia adjusted its nickel ore benchmark pricing formula this week, bringing cost-support expectations to the market and driving nickel prices sharply higher. Against the backdrop of rising MHP payables and stable high-grade nickel matte coefficients, absolute prices of MHP and high-grade nickel matte rose in tandem with nickel prices. In addition, MHP cobalt prices also rose, driven by the rise in refined cobalt prices. Overall, the intermediate product market is expected to hold up well in the short term.