This week, the average price of SMM 8-12% high-grade nickel pig iron (NPI) is 968.8 yuan per nickel point (including tax, ex-factory), which is an increase of 12.1 yuan per nickel point compared to last week. Meanwhile, the Indonesian NPI FOB index rose by $1.8 per nickel point from last week, indicating a continuous upward trend in high-grade NPI prices this week.
On the supply side, domestic conditions indicate that nickel pig iron smelters are currently operating at a loss, resulting in low production levels. In Indonesia, changes in production management in some regions have led to production lines operating at low capacity. Nonetheless, some other smelters still have profit margins, maintaining production motivation, but overall output is expected to decline.
On the demand side, the stainless steel market is gradually resuming activity after the holiday, with market sentiment slowly improving. However, due to ample raw material reserves at stainless steel plants in the earlier period, their interest in purchasing high-grade NPI this week is not high. Additionally, from the cost perspective, as premiums on Indonesian nickel ore rise, high-grade NPI prices are expected to remain stable and strong in the short term, supported by costs.
Notably, the average discount of high-grade NPI compared to electrolytic nickel this week is 271.95 yuan per nickel point, narrowing by 20.7 yuan per nickel point compared to last week. This indicates that with the market supply tightening, traders are actively purchasing, pushing the market focus upward.
In the pure nickel market, macroeconomic factors such as the diminishing impact of U.S. tariffs and the Russia-Ukraine conflict entering negotiation stages provide positive signals for the overall macro environment, benefiting non-ferrous metals and causing a rebound in pure nickel prices this week. However, from a fundamental perspective, demand for pure nickel remains under pressure, particularly with post-holiday demand from downstream alloy sectors performing poorly. Nevertheless, with continued deliveries from the LME, pure nickel production remains stable, limiting upward momentum for nickel prices.
Overall, in the context of tight market circulation and high one-time price quotes, there is potential for high-grade NPI prices to continue rising in the short term. Conversely, due to weaker fundamentals, pure nickel prices may face downside risks. The average discount of high-grade NPI compared to electrolytic nickel is expected to further narrow. From the cost side, considering nickel ore prices, the losses for high-grade NPI smelters have slightly reduced in the short term.
Analyzing various auxiliary material prices for the week, the prices of met coke and thermal coal remained relatively weak, with upstream inventories continuing to increase. Despite some improvements in downstream demand, it is not strong. Therefore, met coke and thermal coal prices remain sluggish. On the ore front, due to the rainy season in the Philippines, both supply and demand for nickel ore are weak, with prices holding steady. The alleviation of smelter losses this week is mainly attributed to rising high-grade NPI prices and loosening costs of auxiliary materials. Looking ahead to next week, with improved downstream demand, auxiliary material prices are expected to recover, while nickel ore prices will likely remain strong and steady. Against a backdrop of strong market expectations, losses for high-grade NPI smelters are expected to further decrease.
![[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)
