Nickel sulphate prices have been stable for nearly a month. How will prices move in the future? [SMM Analysis]

Nickel sulphate prices have been stable for nearly a month. How will prices move in the future?

Raw material side, MHP side, Indonesian new nickel hydrometallurgy intermediate products project A has steadily ramped up production, leading to a gradual increase in supply. However, project B is expected to reduce production due to certain factors, which may continue until the end of Q3. The tight balance structure of MHP is further intensified. The MHP percentage payable has limited room to decline. However, as nickel prices returned to fundamentals, nickel prices are still expected to decline. The price of MHP still has room to fall. High-grade nickel matte side, the percentage payable is stuck around 82%-83%, but the overall price may still decline with nickel prices. Therefore, the raw material cost of nickel salt may still have downward room.

Fundamentally, affected by losses and inventory accumulation, the operating rate decreased. Consequently, nickel salt gradually entered destocking due to the procurement demand from precursor producers. Demand side, as battery cell production is expected to increase and cathode material inventory adjustment ended, normal restocking resumed, leading to the recovery of precursor orders. SMM expects precursor orders in July to rise by 5% MoM compared to June, but it is difficult to return to May levels. Orders in August will continue to increase MoM, possibly flat or exceeding the scheduled production of May this year. Therefore, as nickel salt smelters enter destocking and still operate at a loss, it is reasonable for them to hold prices firm. Currently, precursor producers have not yet started restocking for August. The downstream restocking may bring a slight rebound in nickel sulphate prices. However, due to limited cost support amid low nickel prices, nickel sulphate prices are expected to have limited upward room.