Nickel Ore Prices Expected to Remain Strong; Philippine Ore Stands Firm on Quotes, Indonesian Ore Premiums [SMM Nickel Morning Meeting Summary]

February 27 Morning Meeting Summary

Refined Nickel:

SMM February 26 News: Spot Premiums/Discounts: The mainstream spot premium quotation range for Jinchuan No. 1 nickel was 1,700-1,900 yuan/mt, with an average premium of 1,800 yuan/mt, up by 50 yuan compared to the previous trading day. The premium/discount quotation range for Russian nickel was -100 to 100 yuan/mt, with the average price at parity, unchanged from the previous trading day. Futures: Nickel prices fluctuated after opening today, down by 0.43%, reaching a low of 123,340 yuan/mt. Regarding spot premiums/discounts: Jinchuan brand nickel rose by 50 yuan compared to the previous trading day, mainly due to the contract rollover of the current most-traded contract. From a technical perspective and market sentiment, the SHFE nickel 2503 contract showed rangebound fluctuations in the morning session, with moderate market trading activity. Regarding the price spread with nickel sulphate: Today, nickel briquette prices were 123,400-123,600 yuan/mt, with an average price of 123,500 yuan/mt, down by 75 yuan/mt compared to the previous trading day's spot price. Nickel sulphate remains at a discount to refined nickel.

Nickel Ore:

Philippine Nickel Ore Prices Rise Due to Indonesian Nickel Ore Price Increases, Mines Show Strong Sentiment to Stand Firm on Quotes

During the week, FOB prices for medium- and high-grade Philippine nickel ore continued to rise post-holiday, while the low-nickel high-iron market saw no transactions. For medium- and high-grade nickel ore, after the Chinese New Year, the sentiment to stand firm on quotes among Philippine mines became evident, influenced by the continuous rise in premiums for Indonesian domestic ore and speculative sentiment around Philippine nickel ore policies. FOB quotations for 1.4% grade nickel ore reached $43-45/wmt. Supply side: Major mining areas in the south remain in the rainy season, with limited supply and fewer tenders in the Philippine nickel ore market during the off-season. Domestic port arrivals of Philippine nickel ore were low, and port inventories continued to decline. The persistently sluggish supply during the rainy season further strengthened the sentiment to raise prices among mines. Demand side: Post-holiday increases in downstream NPI prices brought some profit recovery, but the growth was less than that of raw material prices. Domestic NPI producers continued to face losses and mainly engaged in just-in-time procurement, with limited acceptance of high-priced nickel ore. Ocean freight rates: Freight rates for nickel ore from the Philippines to Lianyungang were $7-8/mt, and to Tianjin Port were $8-9/mt. Overall, influenced by multiple factors, Philippine nickel ore prices are expected to fluctuate upward in the future.

Indonesian Laterite Domestic Ore Premiums Continue to Rise, Upward Trend Persists

Regarding current market transaction prices: For pyrometallurgical ore, premiums for nickel ore in the Sulawesi Island industrial park rose to $18-19 in February, while premiums for other islands exceeded $22 due to freight costs. The SMM CIF price for 1.6% Indonesian domestic ore was $39/wmt. For hydrometallurgical ore, mainstream CIF quotations in the market exceeded $25. Supply side: Although nickel ore supply was slightly more abundant compared to the same period last year, the rainy season in Sulawesi and the upcoming Ramadan significantly impacted supply rhythms. The SIMBARA system's crackdown on "non-compliant" nickel ore further exacerbated Q1 supply issues. Additionally, rising fuel costs in Indonesia increased land transportation costs. Demand side: After February restocking, downstream pyrometallurgical smelters' inventories moved away from the pre-holiday critical low levels but were still incomplete, driving active raw material procurement and supporting premium increases to some extent. For hydrometallurgical ore, the continuous ramp-up of MHP projects in H1 and the commissioning of new projects in Q3 and Q4 created a mismatch between downstream demand and market availability, leading to faster price increases for hydrometallurgical ore compared to pyrometallurgical ore. Moreover, the market remained cautious about uncertainties surrounding the annual RKAB policy. In summary, SMM expects Indonesian ore prices to fluctuate upward in the short term. In March, domestic premiums in Sulawesi Island are expected to exceed $20. In the medium and long term, the tight supply rhythm of nickel ore is likely to persist throughout the year.

Nickel Sulphate:

February 26, the SMM battery-grade nickel sulphate index price was 26,576 yuan/mt, with a quotation range of 26,390-27,050 yuan/mt, unchanged from the previous day.

On the cost side, LME nickel prices weakened today, reducing nickel sulphate costs. On the demand side, this week marks a traditional procurement period for nickel sulphate, as precursor plants have yet to complete their nickel salt inventories for March, leading to ongoing inquiries this week. From the supply perspective, the degree of losses in nickel salt production has eased, and nickel salt producers have softened their quotations. In summary, considering weak market demand and the price relaxation by nickel salt smelters, nickel sulphate prices are expected to decline in the short term.

NPI:

February 26, the SMM 8-12% high-grade NPI average price was 979 yuan/mtu (ex-factory, tax included), up by 3 yuan/mtu compared to the previous working day. Supply side: Domestically, smelters remained in a loss-making phase, with production schedules expected to operate at low levels. In Indonesia, a major production area adjusted its production rhythm to reduce operating loads. Additionally, high-grade nickel ore resources in Indonesia were relatively tight, with declining grades in major production areas, leading to expectations of reduced metal content. Demand side: Stainless steel spot prices continued to decline, with sluggish market transactions. Stainless steel mills, having completed earlier restocking and benefiting from improved stainless steel scrap economics, showed weakened demand for high-grade NPI. However, supported by costs and tight spot availability, market transaction prices reached new highs today, and prices are expected to remain relatively stable with a strong trend in the short term.

Stainless Steel:

February 26, stainless steel market prices slightly declined, with mediocre performance in transactions.

As of 10:30, the SHFE stainless steel most-traded SS2505 contract was quoted at 13,130 yuan/mt. In Wuxi, stainless steel spot premiums ranged from -10 to 290 yuan/mt. Note: Spot trimmed-edge price = mill-edge price + 170 yuan/mt.

In the spot market, for 200-series stainless steel, the average price of 201/2B coil in Wuxi was 7,725 yuan/mt, down by 25 yuan/mt from the previous day, while the nationwide average price was 7,830 yuan/mt, down by 15 yuan/mt. For 300-series stainless steel, the average mill-edge price of 304/2B coil in Wuxi was 13,100 yuan/mt, down by 50 yuan/mt, and the trimmed-edge average price was 13,600 yuan/mt, down by 50 yuan/mt. Nationwide, the average price of 304/2B coil was 13,140 yuan/mt, down by 30 yuan/mt. Overall, some stainless steel spot prices declined, with mediocre market transactions. On one hand, demand remained weak, with downstream buyers mainly engaging in just-in-time procurement. On the other hand, despite some cost support, ample market supply limited price increases.