4.3 Nickel Morning Meeting Summary
Macro News:
(1) The US one-year inflation rate expectation surged from 5.0% last month to 6.5% this month, the highest level since 1980, marking a significant rise of 0.5 percentage points or more for four consecutive months. Long-term inflation expectations climbed from 4.1% in March to 4.4% in April. The immediate forecast for core CPI inflation is 2.941%, which, although lower than the core PCE inflation rate, remains above the long-term target of the US Fed.
(2) Sources say that the European Central Bank (ECB) policymakers are increasingly confident about cutting interest rates in June due to persistently declining inflation, but they will not make a substantial cut. Last week, several ECB board members attended the International Monetary Fund (IMF) and World Bank Spring Meetings, discussing the potential deterioration of the eurozone and global economy due to US tariffs. Meanwhile, the latest economic data from the eurozone also reflects this phenomenon. As for inflation, there is no indication yet that it has worsened due to tariffs.
Pure Nickel:
Spot Market: Today, the SMM #1 refined nickel price is 124,350-126,850 yuan/mt, with an average price of 125,600 yuan/mt, up 550 yuan/mt from the previous trading day. The mainstream spot premiums for Jinchuan No.1 nickel range from 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 premiums and discounts for Russian nickel range from 0-300 yuan/mt, with an average premium of 150 yuan/mt, unchanged from the previous trading day.
Futures Market: The most-traded SHFE nickel contract (NI2506) rose slightly by 0.16% to 124,890 yuan/mt during the night session, but weakened continuously during the day due to macro sentiment. The closing price at 11:30 was 124,130 yuan/mt, down approximately 0.4% from the previous trading day's settlement price.
Expectations for US Fed interest rate hikes in June have increased, coupled with a rebound in US manufacturing data, putting pressure on LME nickel prices denominated in US dollars. Current nickel prices are influenced by multiple macro factors, including the Sino-US tariff negotiations, policy adjustments in Indonesia, and tightening dollar liquidity, with cost support and surplus pressure coexisting.
Nickel Sulphate:
On April 29, the SMM battery-grade nickel sulphate index price was 27,818 yuan/mt, with the quotation range for battery-grade nickel sulphate at 27,820-28,340 yuan/mt, and the average price remained stable compared to the previous day.
Cost side, LME nickel prices, supported by costs and influenced by Indonesian policies, have recently provided strong cost support for nickel sulphate. Additionally, due to production cuts in Indonesian MHP and high-grade nickel matte projects, raw material supply is tight, pushing the MHP coefficient to fluctuate at highs with limited downward momentum. On the supply side, some nickel salt smelters have limited remaining sales volumes for May, leading to firm quotations. Some nickel salt smelters, having not completed raw material stocking, have expectations for production cuts. With raw material prices fluctuating at highs, their prices remain firm. Demand side, as the circulation of nickel salts produced from low-cost recycled materials is nearly exhausted, precursor manufacturers' inquiries for nickel sulphate produced from primary materials have increased this week. Moreover, the acceptance of nickel sulphate prices by precursor manufacturers has improved. Looking ahead, based on the fundamentals of 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.
NPI:
On April 29, the SMM 8-12% high-grade NPI average price was 967.5 yuan/mtu (ex-factory, tax included), unchanged from the previous working day. Supply side, domestically, smelter profits have started to tighten, and high-cost smelters are experiencing deeper losses, resulting in low production levels. In Indonesia, domestic premiums continue to hold steady with a slight rise, further increasing the cost burden on smelters. With weakening profits or even entering into losses, there is significant resistance to increasing production, and there may be expectations for a decline in metal content. Demand side, the pre-Labour Day holiday stockpiling demand for stainless steel did not materialize, and stainless steel spot prices continued to be in the doldrums. Stainless steel mills' procurement of high-grade NPI was sluggish, and some mills have already met their future raw material stocking needs. It is expected that high-grade NPI will continue to be affected by the weak stainless steel market, and prices will remain in the doldrums in the short term.
Stainless Steel:
On April 29, SS futures showed a pattern of first falling then rising, continuing the previous fluctuating trend. As the Labour Day holiday approaches, downstream enterprises are adopting a wait-and-see attitude, and pre-holiday stockpiling demand is muted, with market transactions remaining sluggish. Currently, stainless steel prices have fallen to relatively low levels, and many stainless steel producers are facing cost and selling price inversions, making further price declines difficult. However, due to the continuous decline in futures prices, current market transactions are mainly low-price warrant trades and just-in-time procurement, and market activity needs to be enhanced.
In the futures market, the most-traded contract 2506 fluctuated. At 10:30 AM, SS2506 was quoted at 12,685 yuan/mt, up 20 yuan/mt from the previous trading day. The spot premiums and discounts for 304/2B cold-rolled coils in Wuxi ranged from 335-585 yuan/mt. In the spot market, 201/2B cold-rolled coils in both Wuxi and Foshan were quoted at 8,100 yuan/mt; 304/2B cut edge cold-rolled coils, with Wuxi averaging 12,950 yuan/mt and Foshan averaging 13,000 yuan/mt; 316L/2B cold-rolled coils in Wuxi were 23,550 yuan/mt, and in Foshan 23,650 yuan/mt; 316L/NO.1 hot-rolled coils in both regions were 22,775 yuan/mt; 430/2B cold-rolled coils in both Wuxi and Foshan were 7,500 yuan/mt.
Currently, pre-Labour Day holiday procurement and stockpiling demand have not met expectations, and market transactions continue to be sluggish. Although the market generally believes that stainless steel prices are at relatively low levels and have the potential for a rebound, the futures market continues to show a weak fluctuating trend, suppressing spot prices and keeping them at low levels. Although there are occasional reports of production cuts by stainless steel mills, the overall reduction in production is limited, mostly involving structural adjustments between steel grades, and there has been no substantial reduction in supply. Affected by the uncertainty of tariff policies, cautious and pessimistic sentiments among downstream enterprises continue to spread, and it is expected that the market will remain in a state of multi-party bargaining in the short term, with prices likely to maintain a stable trend.
Nickel Ore:
Last week, Philippine nickel ore FOB prices rose, while CIF prices held steady with a slight increase. From a supply and demand perspective, the rainy season in southern Philippines is basically over, and Surigo region mines are expected to see an increase in medium-grade nickel ore shipments. On the demand side, domestic NPI prices continued to fall during the week, and domestic smelters' acceptance of high-priced nickel ore decreased. From an inventory perspective, domestic nickel iron plant inventories remain at relatively low levels, and just-in-time procurement demand still exists, but the acceptance of nickel ore prices is limited. Cost-wise, Philippine 1.3% nickel ore transaction prices were mostly above $35/wmt FOB, increasing the import cost of nickel ore. Overall, the high offer prices from the Philippines and the decreasing acceptance of high-priced nickel ore by domestic NPI enterprises create an imbalance, leaving NPI factories in a dilemma regarding raw material procurement. Ocean freight rates remained stable with a slight increase during the week, with rates from Surigao to Lianyungang ranging from $10.5-$11/wmt. Exports from the Philippines to Indonesia continued to increase, and Indonesian nickel ore prices remained generally stable with a slight rise, providing some support to Philippine nickel ore prices. Overall, SMM expects Philippine nickel ore prices to hold up well in the coming period.
Indonesian ore prices remained stable last week. For pyrometallurgy ore, upstream and downstream parties are negotiating premiums for May, and transaction prices temporarily held steady. Last week, the main premiums for pyrometallurgy ore in Sulawesi remained at $24-$26. SMM's Indonesian local ore 1.6% delivery-to-factory price was $51.5-$53.5/wmt. For hydrometallurgy ore, prices showed a slight softening, with SMM's Indonesian local ore 1.2% delivery-to-factory price at $23.5-$24.5/wmt.
For pyrometallurgy ore: Supply side, the rainy season in Sulawesi lasted longer, with frequent rainfall during the week, slowing the recovery of nickel ore supply. Demand side, downstream NPI enterprises still have just-in-time procurement needs, and the difficulty in raw material stocking in Q1 means the tight supply of nickel ore continues. Policy-wise, the PNBP policy, which includes an increase in nickel royalties, took effect on April 26, raising the cost of nickel ore sales. Overall, pyrometallurgy ore prices are expected to hold up well with a slight rise.
For hydrometallurgy ore: Supply side, the tight supply situation for hydrometallurgy ore was not evident during the week. Demand side, the accident at the hydrometallurgy project in Sulawesi affected the demand for hydrometallurgy ore by HPAL smelters in April. Overall, hydrometallurgy ore prices are expected to be in the doldrums and may see a small decrease.
