Stabilizing NPI Prices and Rising Demand Signal Strong Market Momentum

Published: Sep 1, 2024 16:25

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The average price of SMM 8-12% high nickel pig iron (NPI) decreased slightly this week, while the Indonesian NPI FOB index experienced a minor increase. Signs of price stabilization and a slight upward trend in NPI transaction prices were observed. Domestically, stabilized NPI prices have improved smelter profit margins and production enthusiasm, with a slight production increase anticipated in September. In Indonesia, fluctuating nickel ore prices and high production costs continue to affect smelters. Demand-wise, stainless steel enterprises are actively procuring in anticipation of the peak season in September, driving up NPI demand. The overall market expects an increase in NPI supply, enhanced by strong demand from the stainless steel industry. Macroeconomic factors like global economic recovery, infrastructure investment, policy support, and environmental requirements also contribute to the positive outlook. Consequently, the NPI market is projected to experience robust growth and a stable to upward trend in the short term.

This week, the average price of SMM 8-12% high nickel pig iron (NPI) was 1001.7 yuan per nickel point (tax-included ex-factory), reflecting a decrease of 1.2 yuan per nickel point compared to last week. Meanwhile, the Indonesian NPI FOB index rose by 0.3 USD per nickel point from the previous week. Overall, transaction prices for NPI have shown signs of stabilization and a slight upward trend following a decline this week.

From the supply side, domestically, the stabilization of current NPI prices has alleviated the negative profit margins of smelters, thereby boosting production enthusiasm and showing a notable improvement compared to earlier situations. A slight increase in production is expected in September. In Indonesia, domestic nickel ore prices are fluctuating at high levels, resulting in persistently high production costs for smelters. Although there is new capacity coming online in Indonesia, the supply of raw materials is tight, limiting the growth.

On the demand side, major stainless steel enterprises continued to purchase according to their needs this week. With the traditional peak season for stainless steel approaching, stainless steel production is expected to increase as anticipated in September, directly driving up the demand for NPI.

In summary, the market currently has expectations of increased NPI supply; simultaneously, the downstream stainless steel industry is entering its traditional peak season with strong market expectations, leading to higher demand and active procurement by steel mills. The upward adjustments in nickel and stainless steel prices have boosted market confidence, and the price of NPI is expected to maintain a steady to strong trend in the near term.

Additionally, from a macroeconomic perspective, the global economic recovery and increased infrastructure investment are also contributing to the growth in demand for raw materials. Furthermore, policy support and heightened environmental requirements are making the NPI industry poised for significant development potential in the foreseeable future. Steel mills, being the primary downstream demand, show strong procurement intentions as the peak season approaches, which also stimulates upstream production activity. Overall, the NPI market is likely to demonstrate robust growth momentum in the short term, displaying a stable to upward trend under the combined influence of various market factors.

NPI Stainless steel SMM price

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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