5.7 Nickel Morning Meeting Summary
Macro News:
(1) Data released by the US Department of Commerce on April 30 showed that the US GDP contracted by 0.3% on an annualized QoQ basis in Q1 2025, hitting a new low since Q2 2022. The expected figure was 0.3%, and the previous reading was 2.4%.
(2) On May 2, the US Bureau of Labor Statistics announced the US non-farm payrolls data for April 2025. The seasonally adjusted non-farm payrolls in the US increased by 177,000 in April, higher than the expected 138,000. Meanwhile, the non-farm payrolls for March and February were revised down by 43,000 and 15,000, respectively. The unemployment rate in April remained at 4.2%, in line with expectations. Although the growth in US non-farm payrolls in April slowed MoM, it still exceeded expectations. Following the release of the non-farm data, US stocks rose, US bond yields increased, and the US dollar index turned from gains to losses.
Refined Nickel:
Spot Market:
Today, the SMM 1# refined nickel price is 123,800-127,350 yuan/mt, with an average price of 125,575 yuan/mt, up 400 yuan/mt from the previous trading day. The quotation range for the mainstream spot premiums of Jinchuan No.1 nickel is 2,100-2,400 yuan/mt, with an average premium of 2,250 yuan/mt, unchanged from the previous trading day. The quotation range for premiums and discounts of Russian nickel is -100-300 yuan/mt, with an average premium of 100 yuan/mt, down 50 yuan/mt from the previous trading day.
Futures Market:
The most-traded SHFE nickel contract (NI2506) opened higher and continued to rise during the session, influenced by the strength of LME nickel during the holiday, hitting a high of 124,970 yuan/mt. As of 11:30, the closing price was 124,900 yuan/mt, up approximately 0.7% from the settlement price of the previous trading day. In terms of inventory, LME nickel inventory stood at 200,418 mt as of May 2, down 1,513 mt from the previous trading day, with inventory remaining at a high level overall. SMM domestic social inventory was approximately 44,100 mt, with destocking of about 560 mt QoQ.
Currently, bullish and bearish factors are intertwined in the nickel market, with nickel prices fluctuating rangebound. The upside pressure comes from weak downstream demand, high inventory pressure, and macroeconomic uncertainties, while the downside support relies on the cost line. Meanwhile, refined nickel raw materials are in short supply, which will affect supply in the short term.
Nickel Sulphate:
On May 6, the SMM battery-grade nickel sulphate index price was 27,824 yuan/mt, with the quotation range for battery-grade nickel sulphate at 27,830-28,340 yuan/mt, and the average price rose slightly WoW.
Cost side, the production of MHP in Indonesia in April was significantly affected by floods, resulting in a supply-demand gap and keeping its coefficient at a high level.Overall, MHP costs provide strong support. Supply side, some nickel salt smelters have limited quantities of nickel available for external sales in the remaining days of May, leading to firm offers. Some nickel salt smelters, having failed to complete their raw material stocking, anticipate production cuts. Additionally, the current high prices of raw materials are driving up their prices. Demand side, as this week is not a traditional procurement phase, some precursor plants have already built up inventories lasting over half a month, resulting in low procurement activity. Looking ahead, based on fundamental factors such as tight raw material supply, stable cost support, and downstream demand dependence, nickel salt prices are expected to show a mild upward trend in the short term.
Nickel Pig Iron (NPI):
On May 6, the average price of SMM 8-12% high-grade NPI was 958 yuan/mtu (ex-factory, tax included), down 9.5 yuan/mtu from the previous working day. Supply side, domestically, some smelters that underwent maintenance earlier have resumed production, coupled with a significant increase in port arrivals of nickel ore from the Philippines, replenishing smelters' raw material inventories. However, due to deepening losses, the increase in production is relatively limited. In Indonesia, the current domestic trade premiums for nickel ore continue to hold up well. The decline in finished product prices has breached the cost lines of some smelters. On this basis, the ramp-up of new capacity may slow down, and there are expectations of a slight decline in production. Demand side, the stainless steel market has performed relatively lackluster after the holiday. The list prices of mainstream steel mills remain at pre-holiday levels, with spot transactions mainly occurring at lower prices. Stainless steel mills are maintaining low prices for forward raw material procurement. Today, a stainless steel mill in South China conducted another tender, with the tender price hitting a new low. It is expected that in the context of declining production schedules at stainless steel mills, high-grade NPI prices will remain under pressure in the short term.
Stainless Steel:
On May 6, the first trading day after the Labour Day holiday, SS futures continued their previous volatile trend, with an overall stable performance. As most traders have just returned from their holidays, market prices have largely remained at pre-holiday levels. Despite the current low prices of stainless steel, influenced by the "rush to buy amid continuous price rise and hold back amid price downturn" sentiment, the market is characterized by strong wait-and-see sentiment, with sluggish transactions showing no signs of significant improvement.
In the futures market, the most-traded contract 2506 fluctuated. At 10:30 a.m., SS2506 was quoted at 12,690 yuan/mt, up 35 yuan/mt from the previous trading day. In the spot market, premiums and discounts for 304/2B stainless steel in Wuxi ranged from 380 to 580 yuan/mt. In the spot market, cold-rolled 201/2B coils in Wuxi and Foshan were both quoted at 8,100 yuan/mt; cold-rolled cut edge 304/2B coils had an average price of 13,000 yuan/mt in Wuxi and 13,000 yuan/mt in Foshan; cold-rolled 316L/2B coils were priced at 23,850 yuan/mt in Wuxi and 23,850 yuan/mt in Foshan; hot-rolled 316L/NO.1 coils were quoted at 23,050 yuan/mt in both Wuxi and Foshan; cold-rolled 430/2B coils were priced at 7,500 yuan/mt in both Wuxi and Foshan.
Currently, the supply side of the stainless steel market continues to maintain a high-level operation trend. To alleviate cost pressures, stainless steel producers are mainly reducing the production of the heavily loss-making 300 series stainless steel and shifting towards increasing the production of 200 series and 400 series stainless steel for steel grade structural adjustments. However, market participants generally reflect that the persistent weakness in downstream consumer demand and cautious procurement behavior have become the core imbalance constraining market development. In the short term, without effective macro policy support, stainless steel prices are expected to continue to exhibit a weak trend in the face of persistently high market supply.
Nickel ore:
This week, the FOB prices of nickel ore from the Philippines fell. The mainstream CIF transaction prices for NI1.3% nickel ore from the Philippines to China were in the range of $44-45/wmt, while the mainstream CIF transaction prices for NI:1.5% nickel ore were in the range of $60-61/wmt. From a supply and demand perspective, the rainy season in the main mining areas of the Philippines has ended, leading to a significant increase in shipments in April. The total number of vessels dispatched from the Philippines in April exceeded 110, indicating market growth expectations. On the demand side, domestic NPI prices have continued to decline recently, and domestic smelters have shown poor acceptance of high-priced nickel ore. From an inventory perspective, the raw material inventory of domestic NPI smelting enterprises remains low, and there is still a need for just-in-time restocking. In terms of ocean freight rates, they remained stable overall during the week, with rates from the Surigao region to Lianyungang, China, being approximately $10.5-11/wmt. Regarding exports from the Philippines to Indonesia, the export volume continues to increase. Indonesian nickel ore prices have generally remained stable and strong within the month, providing some support to the prices of nickel ore from the Philippines. Therefore, it may be difficult for the FOB prices of nickel ore from the Philippines to experience a significant decline. Overall, SMM expects that the subsequent prices of nickel ore from the Philippines may temporarily stabilize, with the market awaiting further transaction developments.
This week, the prices of Indonesian ore have slightly increased. For ore used for pyrometallurgy, the mainstream premium for Indonesia's local ore in May fell within the range of $26-28/wmt. The delivery-to-factory price for SMM's 1.6% Indonesia's local ore was in the range of $52.6-54.6/wmt, representing a week-on-week increase of $1.1/wmt, or 2%. For ore used for hydrometallurgy, market prices have slightly loosened, with the delivery-to-factory price for SMM's 1.2% Indonesia's local ore being in the range of $23.5-24.5/wmt.
For ore used for pyrometallurgy: The nickel royalties under the PNBP policy have been raised and officially implemented on April 26, leading to a certain increase in the sales cost of nickel ore. Mines have a strong sentiment to stand firm on quotes. From a supply and demand perspective, on the supply side, precipitation remained frequent in the Sulawesi region of Indonesia during the week, and the rainy season is also expected to arrive in Halmahera in May, with rainfall continuing to affect the supply of nickel ore. On the demand side, downstream NPI enterprises still have just-in-time procurement needs. Additionally, the restocking of raw materials by smelting enterprises in Q1 was not smooth, and the tight supply situation of nickel ore continues. Under these circumstances, influenced by the decline in LME prices in April, the HPM price for NI1.6% Indonesia's local ore in the first half of May decreased by $0.87/wmt compared to the second half of April, deviating from market prices. Therefore, the nickel ore premium has been raised again.Overall, ore used for pyrometallurgy prices rose slightly again during the week, leaving downstream NPI enterprises in a dilemma.
For ore used for hydrometallurgy: On the supply side, the tight supply of ore used for hydrometallurgy during the week was not immediately apparent. On the demand side, the accident at the hydrometallurgy project in the Sulawesi park affected the demand for ore used for hydrometallurgy from HPAL smelters in Indonesia in April. Overall, the subsequent prices of ore used for hydrometallurgy are in the doldrums and may see a slight decline.
