Strong Sentiment to Stand Firm on Nickel Ore Quotes; Philippine and Indonesian Ore Prices Expected to Rise [SMM Nickel Morning Meeting Summary]

February 28 Morning Meeting Summary

Refined Nickel:

SMM February 27 News: Spot Premiums/Discounts: The mainstream spot premium quotation range for Jinchuan No. 1 nickel was 1,600-1,800 yuan/mt, with an average premium of 1,750 yuan/mt, down 50 yuan from the previous trading day. The premium/discount quotation range for Russian nickel was -100 to 0 yuan/mt, with an average discount of 50 yuan/mt, also down 50 yuan from the previous trading day. Futures: Nickel prices showed mixed trends after opening today, rising slightly at the start before pulling back. As of the 11:30 closing price, it stood at 124,920 yuan/mt, up 0.50% from the previous settlement price, with a high of 125,800 yuan/mt. Regarding spot premiums/discounts: Jinchuan brand nickel fell by 50 yuan compared to the previous trading day, mainly due to the ongoing contract rollover period and the incomplete recovery of downstream demand. From a technical perspective and market sentiment, the SHFE nickel 2503 contract showed fluctuating trends in the morning session. Sentiment may depend on whether the Two Sessions release any favorable news or policies to stimulate market demand. Regarding the price spread with nickel sulphate: Today, nickel briquette prices were 124,100-124,500 yuan/mt, with an average price of 124,300 yuan/mt, up 800 yuan/mt from the previous 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, Strong Sentiment to Stand Firm on Quotes

During the week, FOB prices for medium- and high-grade Philippine nickel ore continued to rise after the 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: The continuous rise in downstream NPI prices after the holiday brought some profit recovery, but the increase was less than that of raw material prices. Domestic NPI plants continued to face losses and mainly maintained 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, due to 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 mostly exceeded $22 due to freight costs. SMM's Indonesian domestic ore 1.6% CIF price was $39/wmt. For hydrometallurgical ore, mainstream CIF quotations in the market were above $25. Supply side: Although nickel ore supply was relatively loose compared to the same period last year, the rainy season in Sulawesi and the upcoming Ramadan significantly affected 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 precarious levels of less than one month before the holiday, but restocking was still incomplete. Active raw material procurement somewhat supported the rise in premiums. 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 for hydrometallurgical ore and insufficient market circulation, leading to faster price increases compared to pyrometallurgical ore. Furthermore, the market remained cautious about the uncertainty of the annual RKAB policy. In summary, SMM expects Indonesian ore prices to fluctuate upward in the short term. In March, domestic premiums on Sulawesi Island are expected to exceed $20. In the medium and long term, the tight supply rhythm of nickel ore throughout the year may persist.

Nickel Sulphate:

February 27, SMM battery-grade nickel sulphate index price was 26,594 yuan/mt, with a quotation range of 26,410-27,070 yuan/mt, and the average price increased compared to the previous day.

In terms of costs, today's LME nickel price rose slightly to $15,575, increasing the production cost of nickel sulphate. Meanwhile, the recent suspension of cobalt exports from Congo caused cobalt prices to surge, leading to an upward trend in the coefficient of cobalt in MHP. The sentiment to stand firm on quotes among MHP sellers strengthened, further pushing up nickel sulphate costs. On the demand side, this week is the traditional peak procurement period for nickel sulphate. Precursor plants have not yet completed restocking nickel salts for March, so procurement demand remains. From the supply perspective, rising raw material procurement prices have strengthened the sentiment to stand firm on quotes among nickel salt producers. In summary, considering the existing demand in the market and the cost-driven sentiment to stand firm on quotes among nickel salt producers, nickel salt prices are expected to have further room for short-term increases.

NPI:

February 27 News, SMM 8-12% high-grade NPI average price was 980 yuan/mtu (ex-factory, tax included), up 1 yuan/mtu from the previous working day. Supply side: Domestically, domestic 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. Currently, high-grade nickel ore resources in Indonesia are relatively tight, with declining grades in major production areas, and metal content is expected to decrease. Demand side: Stainless steel spot prices continued to decline, and market transactions were sluggish. Stainless steel mills, having completed earlier inventory restocking and with improved economics of stainless steel scrap, showed weakened demand for high-grade NPI. However, with cost support and tight spot market circulation, prices are expected to remain relatively stable with a strong trend in the short term.

Stainless Steel:

February 27, the stainless steel market saw a tug-of-war between longs and shorts in futures, with spot inventories continuing to build up and prices mostly stagnant, with some prices declining.

As of 10:30, the SHFE stainless steel futures most-traded SS2505 contract was quoted at 13,200 yuan/mt. In Wuxi, stainless steel spot premiums ranged from -80 to 220 yuan/mt. Note: Spot trimmed-edge price = rough-edge price + 170 yuan/mt.

In the spot market, stainless steel inventories in major markets such as Foshan and Wuxi remained high, with some spot prices showing a downward trend. Market transaction sentiment was mediocre, lacking vitality. From the supply and demand perspective, demand remained sluggish, with most downstream customers only making just-in-time procurement and showing no strong purchasing intentions. On the supply side, despite some cost support, overall market supply remained relatively abundant. The oversupply situation made it difficult for stainless steel prices to gain sufficient upward momentum.