This week, the average ex-factory price (including tax) of SMM8-12% high-grade nickel pig iron is 1016.5 yuan per nickel point, an increase of 15 yuan per nickel point compared to last week. Meanwhile, the Indonesian NPI FOB index has also risen by 1.9 USD per nickel point. High-grade nickel pig iron prices continue to display a strong upward trend this week.
From the supply side, domestically, with the end of the rainy season in the Philippines approaching, raw material supplies for domestic smelters are expected to increase. As profit margins gradually recover, production might also rise. In Indonesia, frequent rains have hampered the transportation and mining of nickel ore, keeping smelter inventories low. Additionally, some production lines have entered staged maintenance and low-load operations. Even with capacity increases, overall production growth remains quite limited.
From the demand side, stainless steel market consumption remains weak, with stainless steel spot prices experiencing a slight drop after rising. Steel mills are cautious in procuring raw materials, and market trading sentiment has somewhat declined. In the short term, with tight supply and demand dynamics, high-nickel pig iron prices are expected to remain stable.
Additionally, this week, the average discount of high-nickel pig iron relative to electrolytic nickel is 285.6 yuan per nickel point, narrowing by 36.1 yuan per nickel point from last week, indicating that high-nickel pig iron prices are still rising. Marketable resources are increasingly scarce, upstream price quotes are strong, and restocking demand from downstream is supporting further price increases.
From the pure nickel perspective, macro factors such as the transfer of "soft data" economic weakness to "hard data" in the US are evident, with several federal survey indicators showing companies retracting capital expenditure plans. Furthermore, slowing inflation data in the US and continued trading of "recession" expectations in overseas markets are putting pressure on the base metals market. On the news front, earlier policy uncertainties around Indonesian nickel resource development led to market sentiment fluctuations, causing a recent nickel price pullback. During the week, the average discount of high-nickel pig iron relative to refined nickel narrowed, primarily due to the rapid correction in nickel prices.
In the short term, high-grade nickel pig iron prices are influenced by the weakening of downstream stainless steel spot prices, leading to low market trading sentiment. However, nickel ore prices remain strong, and under the support of overall costs, prices are expected to stay stable. From a nickel price perspective, numerous bearish macro and news factors exist in the short term, but the potential rise in nickel ore premiums will keep the cost center of nickel prices relatively firm. Nickel prices may decline but likely within a limited range.
Next week, the discount between high-grade nickel pig iron and refined nickel may experience slight volatility and narrowing. From the cost perspective, based on nickel ore prices from 25 days ago, the loss situation of high-nickel pig iron smelters has improved this week. Regarding raw materials, auxiliary material prices continue to fall amid poor macroeconomic performance and weak pig iron demand, while nickel ore prices remain stable. Given the limited domestic reception volume, prices are steady. Next week, auxiliary material prices may continue to weaken, but nickel ore prices are expected to stay stable. High-grade nickel pig iron prices might be pressured by weak stainless steel demand, leading to slight fluctuations in smelters' losses.
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