Supply and Demand Shifts Continue to Exert Pressure, High-Nickel Pig Iron and Pure Nickel Prices Face Downward Pressure

In this week's metal market, the price of high-nickel pig iron (NPI) continued to be under pressure. According to specific data, the average price of SMM 8-12% high-nickel pig iron was 943.4 yuan per nickel point (ex-factory, including tax), a slight decrease of 3 yuan per nickel point from the previous week. Moreover, the Indonesian NPI FOB index also dropped by $0.8 per nickel point compared to last week. This week's market trends indicate that the dynamic changes between supply and demand continue to impact prices, and market participants need to closely monitor the further development of these factors.

From the supply side, domestically, smelters are gradually facing a dilemma of inverted profits, leading to weakened production momentum and overall stable output. However, there's been a noticeable increase in nickel pig iron imports in November, exerting pressure on the domestic market's resource flow. Market observers noted that with the increase in imports, domestic market circulation resources are beginning to expand, which could exert further downward pressure on prices.

On the international front, Indonesia, as a significant global nickel producer, has seen further releases in nickel ore production, providing some smelters with around two months of inventory reserves. At the same time, the commissioning of new production capacities and the shift of some production lines from high-grade nickel to nickel pig iron have contributed to the increase in Indonesia's nickel pig iron output. This expansion in supply is introducing new supply pressure to the global nickel market.

Attention should also be paid to the demand side. Stainless steel consumption has not met market expectations, with a slow pace in destocking, leading to sustained weak demand for raw materials from downstream manufacturers. Further declines in procurement prices from steel mills in East China reflect this weak market sentiment. In this context, the industry expects there is a risk of stainless steel spot prices retreating in the short term, which could have a negative feedback effect on the prices of upstream high-nickel pig iron.

Despite the downward pressure on high-nickel pig iron prices, the decline is somewhat limited, given the still supportive nickel ore prices. This week, the average discount of high-nickel pig iron relative to electrolytic nickel narrowed to 298.4 yuan per nickel point, indicating reduced market discount margins, which also reflects the cost support's restraining influence on price bottoms.

It is worth mentioning that the pure nickel market is also under pressure. The Federal Reserve implemented a 25-basis-point rate cut in December, and the expectations for further rate cuts next year have weakened, exerting a certain suppressive effect on commodity prices. Fundamentally, the nickel oversupply situation is difficult to reverse shortly, and the continuous accumulation of LME nickel stocks sets obstacles for nickel price increases. The downward trend in nickel ore prices is pressuring the cost line for pure nickel, with nickel prices continuing to search for lower levels.

Looking ahead to next week's market, it is expected that the price decline for high-nickel pig iron will be limited due to cost support, while pure nickel faces further downside risks under the combined influence of weak fundamentals and easing costs. The average discount of high-nickel pig iron compared to electrolytic nickel may continue to narrow, and the market should cautiously address potential uncertainties.