High-Nickel Pig Iron Prices Continue to Plunge Amidst Weak Market Fundamentals

In this week's nickel market, the price of high-nickel pig iron continues to be under pressure with a widened decline. Specifically, the average price of SMM 8-12% high-nickel pig iron for the week was 1,005.2 yuan per nickel point (including tax, ex-factory), a decrease of 15.1 yuan per nickel point compared to last week. Meanwhile, the Indonesian NPI FOB index decreased by 3.9 dollars per nickel point compared to last week. This indicates an accelerated decline in high-nickel pig iron prices this week.

Analyzing the supply side, there have been some changes in the domestic market. The economic efficiency of external procurement for domestic integrated steel mills has improved, yet the total self-produced volume has decreased. Meanwhile, the average grade of traditional smelters has risen, slightly boosting the amount of metal, keeping the overall production stable. In the Indonesian market, factors like new nickel pig iron capacities gradually reaching capacity and some high-grade nickel reverting to nickel pig iron have contributed to maintaining the expectations of increased Indonesian output.

On the demand side, as November approaches, the stainless steel industry is entering its off-season for consumption and the market is in a phase of inventory digestion, leading to weaker spot prices. Stainless steel mills have slightly reduced production and the raw material procurement cycle has slowed down. Additionally, some steel mills already have long-term supply contracts in place, leading to continued sluggish trading sentiment in the high-nickel pig iron market. In the short term, the price of high-nickel pig iron remains under downward pressure.

This week, the average discount of high-nickel pig iron compared to electrolytic nickel was 254.3 yuan per nickel point, an increase of 14.7 yuan per nickel point in discount compared to last week. This change also reflects the deep decline in high-nickel pig iron market prices. Notably, the purchase transaction prices at stainless steel mills in South China have reached a recent low, with the overall inquiry prices in the market adjusted downward.

In terms of pure nickel, nickel prices have shown a weakening trend amidst fluctuations. From a macroeconomic perspective, the latest speech from the Federal Reserve suggested that the current state of the U.S. economy implies no urgency to cut interest rates, which has had a negative impact on the non-ferrous metals market. Meanwhile, LEM warrants are still accumulating, further increasing the downward pressure on nickel prices.

Overall, due to the weak fundamentals of the stainless steel market, spot prices for high-nickel pig iron face the risk of further declines in the short term. Conversely, pure nickel prices are expected to continue a trend of fluctuating declines under the dual influence of macroeconomic disruptions and weak fundamentals. Consequently, it is anticipated that the discount of high-nickel pig iron compared to electrolytic nickel will further widen next week.