In this week's developments in the nickel industry, the market performance of SMM 8-12% high-grade nickel pig iron (NPI) has attracted attention. Data shows that the average price of high-grade NPI reached 936.4 yuan per nickel point (ex-factory, including tax), which marks a decrease compared to last week, with a decline of 3.7 yuan per nickel point. Meanwhile, the Indonesian NPI FOB index also dropped by 0.4 USD per nickel point compared to last week, reflecting the market's weakness.
On the supply side, the domestic market has seen a decline in high-grade NPI prices, which has squeezed the profitability of smelters, causing some companies to adjust their production strategies and resulting in an overall decrease in output. However, Indonesia's NPI supply continues to increase, primarily due to the gradual release of new production capacity. This supply-demand imbalance could exert further pressure on future market prices.
From the demand perspective, stainless steel spot prices remained sluggish this week. The proportion of long-term contracts at major stainless steel plants has increased, leading to weakened external purchasing demand. Additionally, as the stainless steel industry enters its traditional maintenance period, demand for high-grade NPI has significantly decreased. Under these circumstances, it is expected that high-grade NPI will maintain a weakly stable state with cost support.
Notably, the price difference between high-grade NPI and electrolytic nickel has changed this week, with the discount narrowing by 8.1 yuan per nickel point compared to last week. Downstream stainless steel companies have also seen a simultaneous weakening in the purchase price of high-grade NPI, closely related to ample raw material inventories and increased long-term contract purchases. In the pure nickel market, the global economic complexities have exerted certain pressure on nickel prices, particularly due to the unexpected performance of the U.S. economy and the conservative stance of the Eurozone and Japanese central banks, posing challenges to non-ferrous metals in the short term. Meanwhile, the expansion plans for overseas electro-winning nickel projects continue, though demand has underperformed expectations, further suppressing the fundamentals of pure nickel.
Cost factors also influence the market direction. Affected by nickel ore prices from 25 days ago, the cash cost of high-grade NPI poses a challenge to smelters' profitability, leading to wider losses. Although auxiliary material prices have stabilized this week, and the coking coal futures market has rebounded with spot prices also recovering, the weak fundamentals continue to keep coke prices low, with no significant change in smelters' auxiliary material costs. Meanwhile, nickel ore prices in the Philippines remain stable due to the rainy season's impact.
In summary, the uncertainty in the future market remains high. With the reduction in downstream steel production putting pressure on auxiliary material prices, nickel ore prices are expected to remain stable, and the high-grade NPI market will continue to face challenges. Under the pressure of losses, smelters may adjust their production strategies to cope with the complex market changes.
![[SMM Nickel Midday Commentary] On March 26, influenced by expectations surrounding the policy of “Indonesia's proposed levy of a nickel export tax,” nickel prices rose significantly](https://imgqn.smm.cn/usercenter/CjEnN20251217171733.jpg)
