High-Grade NPI Market Prices Steadily Rise as Supply and Demand Dynamics Drive Short-Term Strength [SMM Analysis]

This week, the high-grade NPI market experienced a steady price increase. The weekly average price of SMM 8-12% high-grade NPI reached 944.2 yuan/mtu (ex-factory, tax included), up by 3.1 yuan/mtu WoW. Meanwhile, the Indonesian NPI FOB index also rose by $0.5/mtu WoW. This change reflects the market's continued bullish sentiment toward high-grade NPI prices.

On the supply side, there were some positive developments in the domestic market. With the end of the Chinese New Year holiday, maintenance at major smelters gradually concluded, and production returned to relatively normal levels. However, it is worth noting that the reduced number of production days this month limited the increase in output. Meanwhile, in Indonesia, overall production declined due to fewer production days and adjustments to production schedules in certain regions.

On the demand side, although the stainless steel futures market fluctuated upward after the holiday, the spot market remained relatively stable. As long-term contract orders account for a large proportion of stainless steel mills' purchases, spot order purchase willingness was weak. Nevertheless, market expectations remain optimistic, with some traders beginning to stockpile, further driving up market prices and keeping high-grade NPI prices relatively stable with a strong trend in the short term.

The price spread between high-grade NPI and refined nickel also narrowed this week. The average discount of high-grade NPI to refined nickel reached 310.17 yuan/mtu, narrowing by 9.4 yuan/mtu WoW. Additionally, market inquiries were active, with some transaction prices even reaching recent highs, pushing the market center upward.

Meanwhile, the international market saw some news affecting price fluctuations. The Philippine Senate passed a bill banning raw ore exports, a policy similar to Indonesia's previous approach, disrupting market sentiment and causing prices to fluctuate upward. From a macro perspective, US January ADP employment data exceeded market expectations, and overall economic data performed well, boosting market sentiment and benefiting base metals.

In the coming period, high-grade NPI is expected to continue rising amid limited resources. However, due to changes in production and supply conditions, refined nickel prices will need to monitor whether the upcoming US non-farm payrolls data exceeds expectations, which could lead to price adjustments. Overall, the price spread between high-grade NPI and refined nickel is expected to continue narrowing.

From an economic cost perspective, at the current nickel ore price level, smelters' cash cost losses narrowed this week. As the auxiliary material market has not fully recovered after the Chinese New Year holiday, auxiliary material prices showed a relatively stable with a weak trend this week. On the mining side, the Philippines remains in the rainy season, with limited shipments, keeping nickel ore prices firm and supporting the upward adjustment of high-grade NPI prices.

Looking ahead to next week, auxiliary material prices are expected to rise and recover under the influence of environmental protection policies promoting carbon reduction. Meanwhile, the firm trend in nickel ore prices is expected to persist. Driven by market sentiment, high-grade NPI prices may continue to strengthen, further reducing smelters' loss margins.

Meanwhile, the Indonesian NPI FOB index also rose by $0.5/mtu WoW. This change reflects the market's continued bullish sentiment toward high-grade NPI prices.

On the supply side, there were some positive developments in the domestic market. With the end of the Chinese New Year holiday, maintenance at major smelters gradually concluded, and production returned to relatively normal levels. However, it is worth noting that the reduced number of production days this month limited the increase in output. Meanwhile, in Indonesia, overall production declined due to fewer production days and adjustments to production schedules in certain regions.

On the demand side, although the stainless steel futures market fluctuated upward after the holiday, the spot market remained relatively stable. As long-term contract orders account for a large proportion of stainless steel mills' purchases, spot order purchase willingness was weak. Nevertheless, market expectations remain optimistic, with some traders beginning to stockpile, further driving up market prices and keeping high-grade NPI prices relatively stable with a strong trend in the short term.

The price spread between high-grade NPI and refined nickel also narrowed this week. The average discount of high-grade NPI to refined nickel reached 310.17 yuan/mtu, narrowing by 9.4 yuan/mtu WoW. Additionally, market inquiries were active, with some transaction prices even reaching recent highs, pushing the market center upward.

Meanwhile, the international market saw some news affecting price fluctuations. The Philippine Senate passed a bill banning raw ore exports, a policy similar to Indonesia's previous approach, disrupting market sentiment and causing prices to fluctuate upward. From a macro perspective, US January ADP employment data exceeded market expectations, and overall economic data performed well, boosting market sentiment and benefiting base metals.

In the coming period, high-grade NPI is expected to continue rising amid limited resources. However, due to changes in production and supply conditions, refined nickel prices will need to monitor whether the upcoming US non-farm payrolls data exceeds expectations, which could lead to price adjustments. Overall, the price spread between high-grade NPI and refined nickel is expected to continue narrowing.

From a cost perspective, at the current nickel ore price level, smelters' cash cost losses narrowed this week. As the auxiliary material market has not fully recovered after the Chinese New Year holiday, auxiliary material prices showed a relatively stable with a weak trend this week. On the mining side, the Philippines remains in the rainy season, with limited shipments, keeping nickel ore prices firm and supporting the upward adjustment of high-grade NPI prices.

Looking ahead to next week, auxiliary material prices are expected to rise and recover under the influence of environmental protection policies promoting carbon reduction. Meanwhile, the firm trend in nickel ore prices is expected to persist. Driven by market sentiment, high-grade NPI prices may continue to strengthen, further reducing smelters' loss margins.

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