This week's market data indicates a continuous decline in high-nickel pig iron prices. The weekly average price of SMM 8-12% high-nickel pig iron was 983.6 yuan per nickel point (ex-factory, including tax), down 21.6 yuan from last week. Meanwhile, the Indonesian NPI FOB index fell by 3.1 dollars per nickel point from the previous week.
On the supply side, domestically, due to the impact of the rainy season keeping Philippine nickel ore prices firm, the downward trend in spot prices has weakened production incentives. However, with the improvement in average grade, metal output has slightly increased. In Indonesia, the additional supply primarily comes from the shift back to high-nickel pig iron due to decreased profits in high-grade nickel, along with the ramp-up of new capacity, potentially increasing the total volume available for China to import.
On the demand side, spot prices for stainless steel continued to decline this week, with market expectations remaining weak. The future raw material inventory needs of major steel mills have been met, leading to subdued market transactions. A certain steel mill in South China reached a new low in transaction price, further lowering market expectations, with short-term high-nickel pig iron prices anticipated to remain weak. Additionally, this week, the average discount of high-nickel pig iron to electrolytic nickel expanded to 269.9 yuan per nickel point, an increase of 15.6 yuan from last week.
Market transaction activity has decreased, with reduced downstream inquiry interest, and with the continuous weakening of stainless steel prices, transaction prices in South China steel mills have further declined. In terms of pure nickel, nickel prices initially rebounded at the beginning of the week but then fell back, mainly due to the latest inflation data not continuing to decline and a shift to neutral attitudes by Fed officials. This reduced market expectations for future Fed rate cuts, negatively impacting the non-ferrous metals market and resulting in nickel prices fluctuating downward.
Overall, in the short term, high-nickel pig iron prices are under pressure due to the weakness in the stainless steel market, and prices are expected to remain low. Although macroeconomic expectations in the United States are improving and expectations for rate cuts this year have cooled, Shanghai nickel prices may continue to decline, though the extent of the decline might be limited. It is anticipated that the trend of widening discounts between high-nickel pig iron and electrolytic nickel could narrow next week.
