Cost Pressure on Domestic High-Grade NPI Eases, New Opportunities and Challenges May Arise in the Future [SMM Analysis]

Recently, there have been significant changes in the operational status of domestic high-grade NPI smelters. According to the latest market data, the cash cost calculation of high-grade NPI has been affected by stable nickel ore prices since the Philippines entered the rainy season 25 days ago. The industry's overall losses narrowed this week compared to last week, a trend closely linked to multiple factors.

First, on the raw material side, the auxiliary material market showed weakness this week, with coke futures prices continuing to decline, a phenomenon particularly evident as the winter stockpiling period nears its end. Due to weakened downstream demand, coke inventory has been increasing, while coking coal prices also remained weak, alleviating production costs for NPI smelters. Against this backdrop, the sintering and reduction costs of smelters eased, leading to a decline in the overall cost line compared to last week.

On the ore side, the rainy season in the Philippines played a key role in stabilizing nickel ore prices. Even under such weather conditions, nickel ore prices did not experience significant volatility but instead remained relatively stable, providing certain cost advantages for smelter operations.

Looking ahead, market analysis suggests that auxiliary material costs may further decline due to continued weakness in downstream demand for ferrous metals. Meanwhile, nickel ore prices are expected to remain stable, which implies that high-grade NPI market prices will also stay steady. Additionally, the losses of smelters are expected to narrow further next week. These developments will bring new challenges and opportunities to the high-grade NPI industry, and market participants need to closely monitor future market dynamics to better adjust their operational strategies.

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