The production cost pressure at nickel salt smelters continues to rise, and inquiries in the nickel sulphate market have become active. [SMM Nickel Morning Meeting Summary]

4.25 Nickel Morning Meeting Minutes

Refined Nickel:

SMM Nickel April 24 Report:

Spot Market: Today, the SMM 1# refined nickel price ranged from 125,700 to 128,200 yuan/mt, with an average price of 126,950 yuan/mt, up 25 yuan/mt from the previous trading day. The mainstream spot premium for Jinchuan No.1 nickel was quoted in the range of 1,900-2,300 yuan/mt, with an average premium of 2,100 yuan/mt, down 150 yuan/mt from the previous trading day. The premium/discount for Russian nickel was quoted in the range of 0-300 yuan/mt, with an average premium of 150 yuan/mt, down 100 yuan/mt from the previous trading day.

Futures Market: The most-traded SHFE nickel contract opened strong in the morning session, once surging to 126,000 yuan/mt, but began to pull back after 10:30 am. As of 11:30 am, the closing price was 125,360 yuan/mt, down 0.43% from the previous trading day's settlement price.

Expectations for a US Fed interest rate hike in June have intensified, coupled with a recovery in US manufacturing data, pushing the US dollar index to a monthly high of 99.2, putting pressure on LME nickel prices denominated in US dollars. Currently, nickel prices are influenced by multiple macro factors, including the US-China tariff dispute, Indonesian policy adjustments, and tightening US dollar liquidity, with cost support and surplus pressure coexisting.

Nickel Sulphate:

On April 24, the SMM battery-grade nickel sulphate index price was 27,808 yuan/mt, with the quotation range for battery-grade nickel sulphate at 27,820-28,340 yuan/mt, and the average price slightly increased from yesterday.

Cost side, LME nickel prices have rebounded significantly recently, driven by cost support and the easing of negative sentiment towards US policies, strengthening the cost support range for nickel salt production. Under the cost transmission effect, the production cost pressure for nickel salt smelters continues to rise. Supply side, due to the MHP coefficient and its persistently high prices, nickel salt smelters maintain a sentiment to stand firm on quotes. Recently, some nickel salt smelters have raised their quotations, and transaction prices have also increased. Demand side, most precursor plants have completed raw material stocking for April, and with the arrival of the May procurement cycle, market inquiries have become active this week. Downstream companies' acceptance of nickel salt prices has slightly improved. Looking ahead, based on tight raw material supply, solid cost support, and sustained downstream demand, nickel salt prices are expected to show a mild upward trend in the short term.

Nickel Pig Iron:

On April 24, the SMM 8-12% high-grade NPI average price was 971 yuan/mtu (ex-factory, tax included), down 3 yuan/mtu from the previous working day. Supply side, domestically, smelter profits are beginning to tighten, and some high-cost smelters are experiencing deeper losses, with weak production driving low output. In Indonesia, the premium for Indonesia's local ore remains stable, and smelter cost lines are generally stable with a slight rise, but spot prices have fallen below the cost lines of some smelters, with production driving weakening in sync with the domestic market, and overall output remains stable. Demand side, stainless steel spot prices are at low levels in recent years, and the immediate raw material costs are high, leading to losses. Short-term raw material procurement demand from downstream stainless steel mills is weak, and the market transaction center continues to decline. It is expected that high-grade NPI prices will remain under pressure in the short term.

Stainless Steel:

On April 24, SS futures showed a volatile pattern, with price movements lacking clear direction, and the spot market continued its previous stable trend. As the Labour Day holiday approaches, the expected pre-holiday stocking demand has not materialized, and downstream buyers are cautious and watchful, with transactions mainly concentrated on low-priced warrant sources. The overall trading atmosphere is quiet, and market activity is low.

Futures side, the most-traded contract 2506 stopped falling and began to rebound. At 10:30 am, SS2506 was quoted at 12,745 yuan/mt, down 40 yuan/mt from the previous trading day. In Wuxi, the spot premium/discount for 304/2B was in the range of 425-625 yuan/mt. In the spot market, the cold-rolled 201/2B coil in Wuxi and Foshan was quoted at 8,250 yuan/mt; the cold-rolled cut edge 304/2B coil in Wuxi averaged 13,100 yuan/mt, and in Foshan averaged 13,150 yuan/mt; the cold-rolled 316L/2B coil in Wuxi was 23,650 yuan/mt, and in Foshan was 23,800 yuan/mt; the hot-rolled 316L/NO.1 coil in both regions was quoted at 22,900 yuan/mt; the cold-rolled 430/2B coil in Wuxi and Foshan was 7,500 yuan/mt.

Notably, social inventory of stainless steel declined significantly this week. After the release of related data in the afternoon, market sentiment was somewhat boosted, and with the rebound in futures, stainless steel quotations were raised. However, downstream customers remain watchful, with low purchasing enthusiasm. Currently, cautious and watchful sentiment in the market is difficult to alleviate in the short term, and downstream end-use demand remains weak. It is expected that stainless steel prices will maintain a generally stable trend in the short term.

Nickel Ore:

Last week, Philippine nickel ore prices remained stable. From a supply and demand perspective, the rainy season in the southern Philippines has basically ended, and shipments of medium-grade nickel ore from Surigao mines are expected to increase. On the demand side, domestic NPI prices continued to fall during the week, and domestic smelters' acceptance of high-priced nickel ore has declined. From an inventory perspective, domestic nickel pig iron plant inventories remain relatively low, and just-in-time procurement demand still exists, but acceptance of nickel ore prices is limited. On ocean freight rates, rates remained generally stable during the week, with the rate from Surigao to Lianyungang, China, at about $10-10.5/wmt. Exports from the Philippines to Indonesia are still increasing, and Indonesian nickel ore prices remained generally stable with a slight rise during the month, providing some support to Philippine nickel ore prices. Overall, SMM expects that due to increased supply and falling downstream NPI prices, Philippine nickel ore prices may trend weakly in the near future.

Indonesian ore prices remained stable with a slight rise last week, as nickel prices pulled back and the PNBP policy implementation was expected, providing some macro support to prices. This week, transaction prices remained generally stable. In the Indonesian market, the mainstream premium for pyrometallurgical ore continued at $24-26, with the 1.6% delivery-to-factory price at $51.5-53.5/wmt. For hydrometallurgical ore, the 1.3% delivery-to-factory price for Indonesia's local ore was about $25-26/wmt.

From a supply and demand perspective, for pyrometallurgical ore: On the supply side, the rainy season in Sulawesi Island has lasted longer, with frequent rainfall during the week, affecting nickel ore mining and transportation. However, overall, rainfall in Indonesia is expected to gradually decrease from April, and nickel ore supply is expected to increase. On the demand side, downstream NPI prices have been impacted by the decline in nickel prices due to Trump's tariff policy, with NPI prices falling significantly during the week, weakening support for nickel ore prices. However, the April premium has been settled, and subsequent adjustments will need to wait for negotiations on the May premium at the end of April. From an inventory perspective, raw material inventories at Indonesian nickel pig iron smelters are generally low, and just-in-time restocking demand still exists. Combined with a slight increase in Indonesian NPI production during the month, demand support remains. Overall, SMM expects that the supply of Indonesian pyrometallurgical ore may continue to be tight. For hydrometallurgical ore: On the supply side, the tight supply situation for hydrometallurgical ore was not obvious during the week. On the demand side, the accident at the hydrometallurgical project in Sulawesi Park affected MHP demand in April. Overall, the hydrometallurgical ore market supply is relatively sufficient. On the policy side, the Indonesian PNBP policy was implemented this week, tentatively starting on the 26th. The increase in royalties has raised the sales cost of nickel ore, but the significant increase in the premium at the beginning of April has already taken into account the impact of the PNBP policy implementation. Looking ahead, this policy is unlikely to further drive up nickel ore prices.

Overall, the nickel ore market is currently mixed with both positive and negative factors, but the main theme of tight supply remains. The future price trend will depend on the rainy season situation in Sulawesi and Maluku Islands in April. SMM expects that Indonesia's local nickel ore prices will remain stable with a slight rise in the short term.