NICEKEL ORE
Indonesian Policies Continue to Cause Disturbances, Premiums Slightly Increase
Current market transaction prices: For pyrometallurgical ore, the mainstream premium price of Indonesian nickel ore in March on Sulawesi Island is $19-20/wmt. The SMM Indonesian domestic trade laterite nickel ore (1.2%, delivery-to-factory price) ranges from $25.5 to $27.5/wmt, up $0.5/wmt WoW and 1.8% MoM. The SMM Indonesian domestic trade laterite nickel ore (1.6%, delivery-to-factory price) ranges from $46.5 to $51.5/wmt, up $0.4/wmt WoW and 0.9% MoM. The price increase trend for pyrometallurgical ore continues, but the growth rate has narrowed compared to February.
Supply: The rainy season in Indonesia's main mining areas in Sulawesi is expected to gradually end in March, leading to an anticipated increase in nickel ore supply. However, downstream smelters still have just-in-time procurement needs, and during March, the Ramadan period may impact supply around Eid al-Fitr.
Demand side: Mid-tier smelters have just-in-time procurement needs this month, providing demand support. Regarding inventory, mid-tier pyrometallurgical enterprises generally maintain inventory levels of less than two months. The restocking sentiment in March remains high, boosting market transaction activity.
For hydrometallurgical ore, the tight supply rhythm continues this year, with the current delivery-to-factory price for hydrometallurgical ore on Sulawesi Island at approximately $26/wmt. With the ramp-up and commissioning of MHP projects within the year, downstream demand is expected to increase. However, due to limited quotas, mines tend to prioritize the more profitable pyrometallurgical ore, actively reducing hydrometallurgical ore sales, resulting in a faster price increase for hydrometallurgical ore compared to pyrometallurgical ore.
Looking ahead, attention should be paid to the impact of the mid-March HPM price announcement on Indonesian nickel ore prices and the actual circulation of domestic trade ore after the rainy season ends. Additionally, the new policy issued this week by Indonesia's Ministry of Energy and Mineral Resources, which adjusts the HPM pricing method, has caused some disturbances in market sentiment, although it does not directly affect nickel smelters.
In summary, Indonesian domestic trade ore prices in March are expected to remain stable with a slight upward trend. Upstream shipments are anticipated to increase, coupled with sustained demand. However, due to the overall tight supply rhythm of nickel ore, the absolute price of Indonesian nickel ore is expected to rise further, albeit at a slower pace.
High-Grade NPI
Downstream Enters Raw Material Stocking Cycle, Tight Resources May Push Prices Further Upward
This week, the Indonesian NPI FOB index increased by $1/mtu WoW. High-grade NPI prices continued to rise this week.
Supply side, the onset of Ramadan combined with lower-than-expected Indonesian nickel ore output has limited smelter production increases. Additionally, production adjustments in certain regions are unlikely to recover in the short term, resulting in only a slight production increase.
Demand side, the stainless steel market entered a post-holiday recovery phase, with a significant increase in stainless steel production schedules, driving higher demand for high-grade NPI. Furthermore, strong raw material prices supported finished product prices, with stainless steel prices rising during the week. Stainless steel mills set new highs for raw material procurement prices.
Cost side, based on nickel ore prices from 25 days ago, the cash cost of high-grade NPI smelting showed further recovery in smelter losses during the week.
Raw material side, auxiliary material prices continued to decline this week, influenced by policies such as carbon steel production restrictions and ongoing inventory buildup of auxiliary materials, leading to further weakening of auxiliary material prices during the week.
Ore side, Philippine nickel ore prices remained stable overall under weak supply and demand conditions.
This week, smelter losses eased mainly due to the strong performance of high-grade NPI prices and the continued decline in auxiliary material cost lines for smelters.
Looking ahead to next week, auxiliary material prices may continue to decline amid weakening downstream demand. Meanwhile, nickel ore prices are expected to rise slightly due to the impact of the Philippine rainy season. With the market center for high-grade NPI continuing to shift upward, smelter profit losses for high-grade NPI may see further recovery.
In summary, SMM expects high-grade NPI prices to remain relatively stable with a strong trend in the short term.
REFINED NICKEL
One project in Indonesia is still ramping up production
This month, the Dingxin project in Indonesia continued full-capacity production, supplying 4,000 mt of refined nickel to the market monthly. Additionally, the Yongheng project is in the process of ramping up production and is expected to reach full capacity (4,000 mt/month) in March-April.
