Nickel Prices Fluctuated in January, Rising First and Then Falling; High-Grade NPI's Discount to Refined Nickel May Narrow in February [SMM Analysis]

January Market Review
In January 2025, the average discount of high-grade NPI to refined nickel was 322.15 yuan/mtu, expanding by 15.45 yuan/mtu MoM. During January, the price spread between the two fluctuated, while refined nickel prices showed an initial rise followed by a decline.

News Analysis:
At the beginning of January, as the approval of Indonesia's 2025 nickel ore RKAB (mining license) entered the new year, market expectations for the Indonesian government to further tighten nickel ore quotas intensified. This news spurred strong intervention by bulls in the futures market, driving nickel prices to rise significantly at the start of the month. However, as trading sentiment gradually eased, nickel prices began to pull back in mid-January.

Macro Front Impact:
In late January, Donald Trump officially assumed the US presidency, shifting market expectations for the US economy to a more optimistic outlook. Meanwhile, dovish expectations for US Fed interest rate cuts exerted bearish pressure on the non-ferrous metals sector, causing nickel prices to face downward pressure.

Supply Side Changes:
Indonesia: In January, new capacity in Indonesia was gradually released, and the drive to convert high-grade nickel matte to high-grade NPI persisted, leading to a slight increase in overall high-grade NPI production.
Domestic: Affected by environmental protection-driven production restrictions during winter and the off-season in downstream demand, some domestic smelters entered maintenance periods, resulting in a slight decline in production.

Demand Side Performance:
The downstream stainless steel market entered the off-season, with weak price performance, causing raw material prices to enter a downward trajectory. High-grade NPI prices continued to decline throughout January, with a relatively subdued market trading atmosphere.

 February Market Outlook
News Analysis:
As of February 2025, Indonesia's RKAB approval quotas had reached 298 million wmt, which were relatively relaxed compared to the same period in 2024. This news caused nickel prices to struggle to rise, alleviating market concerns over tight nickel ore supply.

Fundamental Analysis:
The downstream market is still in a post-holiday recovery phase, with a surplus in the supply of various nickel-related products, resulting in a relatively loose nickel balance. Weak fundamentals make it difficult for nickel prices to rebound significantly in the short term.

High-Grade NPI Market:
Supply Side: Ore prices remained relatively stable with a strong trend, coupled with tight availability of marketable resources. Post-holiday, traders showed high enthusiasm for stockpiling, pushing spot prices upward.
Demand Side: As the stainless steel market gradually recovers post-holiday, demand for high-grade NPI is expected to rebound, leaving room for further price increases.

 Conclusion
In summary, the average discount of high-grade NPI to refined nickel in February is expected to narrow. Although nickel prices face upward resistance under loose fundamentals, the high-grade NPI market is likely to fluctuate upward, driven by tight supply and traders' stockpiling demand. Moving forward, close attention should be paid to changes in Indonesia's nickel ore policies, the recovery progress of the downstream stainless steel market, and the impact of macro policies on the non-ferrous metals sector.

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