Continued Downward Trend in High-Nickel Pig Iron Prices Amid Weak Demand

This week, the high-nickel pig iron (NPI) market has shown a continuous downward trend. According to SMM data, the average price of 8-12% high-nickel pig iron within the week was 962.2 yuan per nickel point (factory price, including tax), which is a decrease of 21.4 yuan per nickel point compared to last week's average. Meanwhile, the Indonesian NPI FOB index dropped by 2.7 dollars per nickel point from last week.

On the supply side, in the domestic market, although the price of Philippine nickel ore has remained stable, the profits of domestic NPI smelters continue to weaken, reducing the motivation for production and keeping output at a low level. In Indonesia, the declining profits of high-grade nickel have led some enterprises to revert production back to nickel pig iron. Additionally, as the current tension over export tax invoices has eased, the amount of high-nickel pig iron expected to be exported to China is likely to increase.

On the demand side, stainless steel spot prices have been continuously declining. The downstream sector is in a seasonal consumption lull, leading to reports of maintenance and production cuts at some steel mills in the north of China. The procurement cycle for raw materials by stainless steel mills has been extended, and transaction prices at steel mills in South China have continued to drop this week, indicating that in the short term, high-nickel pig iron prices are expected to remain weak. Meanwhile, this week's average discount of high-nickel pig iron relative to electrolytic nickel reached 305.1 yuan per nickel point, widening by 35.2 yuan per nickel point from last week, indicating a continuous downward trend in high-nickel pig iron prices.

No significant increase in market transaction activity was observed this week. Against the backdrop of persistently weak stainless steel prices, transaction prices at steel mills in South China further declined. Moreover, with some easing in ore prices, the cost of high-nickel pig iron has decreased, expanding the space for sellers' concessions. In terms of pure nickel, the macroeconomic environment has not recently provided strong upward momentum, and the fundamental market structure has not changed significantly, leading to a fluctuating trend in pure nickel prices.

The decline in high-nickel pig iron prices has deepened its discount relative to electrolytic nickel. In the short term, high-nickel pig iron is expected to remain constrained by the weakness in stainless steel prices, making a reversal unlikely. Additionally, the current weak demand in the new energy and stainless steel sectors shows no signs of improvement in the fundamental market structure. Concerns about ore supply have also gradually subsided, suggesting this weak market state will likely continue.

Looking ahead to next week, the discount of high-nickel pig iron relative to electrolytic nickel may further deepen. However, with cost support for high-nickel pig iron still present, the extent of this widening is expected to be somewhat limited.