Upward Trend Continues: High-Nickel Pig Iron Prices Rise Amid Supply and Demand Dynamics

This week, the high-nickel pig iron market continues to show an upward trend in prices. According to the latest data, the weekly average price of SMM 8-12% high-nickel pig iron reached 987.8 RMB per nickel point (ex-factory, including tax), an increase of 9.4 RMB per nickel point compared to last week. Meanwhile, the international market's Indonesia NPI FOB index also increased by 1 USD per nickel point over the past week. Overall, the price of high-nickel pig iron continues to maintain an upward trend.

From the supply side analysis, domestic smelters' profit losses have eased somewhat this week. However, due to the depletion of nickel ore inventories, production remains low. In Indonesia, the Ramadan period and nickel ore supply have not increased as expected, limiting the actual increase in local smelters' output. Additionally, production adjustments in some areas have not fully recovered, leading to only a slight increase in output.

On the demand side, as the stainless steel market gradually exits the post-holiday recovery period, production plans for stainless steel have significantly increased, thus driving demand for high-nickel pig iron. Additionally, the firmness in raw material prices has led to a rise in finished stainless steel prices this week, resulting in record high procurement prices for raw materials at stainless steel plants. Consequently, in the short term, the price of high-nickel pig iron is expected to continue to maintain a stable upward trend.

From a raw material economics perspective, this week the average discount of high-nickel pig iron to electrolytic nickel is 289.5 RMB per nickel point, an expansion of 20.65 RMB per nickel point compared to last week, indicating that high-nickel pig iron's competitive advantage in the market has further strengthened. Furthermore, downstream stainless steel plants are actively stocking up, with concentrated purchasing behavior pushing up market prices.

At the macroeconomic level, according to data released during the week, the U.S. economic indicators for February failed to meet market expectations, weakening confidence in the U.S. economic recovery. This has led to a decline in the U.S. dollar index, providing support for non-ferrous metals including nickel. Nickel prices rebounded this week.

Additionally, the introduction of new pricing formulas for Indonesian nickel ore and main smelting products has heightened expectations of a shortage in Indonesian nickel resources, thus providing support for nickel prices. In the short term, given the cost support and tight supply-demand expectations, high-nickel pig iron prices still have room to rise.

From a cost perspective, due to changes in nickel ore prices 25 days ago, the calculated cash costs for high-nickel pig iron show that profit losses for smelters have further eased this week. On the raw material side, the prices of auxiliary materials continue to decline, with ongoing stockpiling phenomena due to policies such as carbon steel production restrictions, causing prices to weaken further. However, on the mining side, affected by the rainy season in the Philippines, nickel ore prices have slightly increased.

Overall, as the price focus in the high-nickel pig iron market continues to shift upwards, the profit losses of smelters may further recover. It is expected that next week, auxiliary material prices may continue to decline with weakened downstream demand, while nickel ore prices remain firm due to seasonal factors. Therefore, the market outlook for high-nickel pig iron remains optimistic.