In this week's market, the average price of SMM 8-12% high-grade nickel pig iron (NPI) was 978.4 yuan per nickel point (ex-factory, tax included), an increase of 9.6 yuan per nickel point from last week. Meanwhile, Indonesia's NPI FOB index rose by $1.1 per nickel point compared to last week. This week, the high-grade NPI market continued to show an upward trend.
From the supply perspective, domestic NPI smelters are still operating at a loss, maintaining low production levels. In Indonesia, nickel ore supply has not increased, resulting in insufficient raw material supply for smelters, and production further declined as one production line adjusted its load.
On the demand side, the stainless steel market is gradually recovering post-Chinese New Year. With steel mills resuming production and downstream demand picking up, crude steel output is expected to rise, supporting demand for high-grade NPI. Transaction prices in the market reached new highs this week, and the short-term high-grade NPI prices are expected to remain strong.
Additionally, the average price difference between high-grade NPI and electrolytic nickel was 268.85 yuan per nickel point, narrowing by 3.1 yuan per nickel point from last week. This week's market was driven by tight high-grade NPI resources and trader purchases, pushing prices further up.
In the pure nickel market, macro factors such as the unresolved U.S. tariffs and Russia-Ukraine negotiations have led to high uncertainty in the global economic situation, putting pressure on the non-ferrous metal market. Notably, Indonesia's foreign exchange policy might cause price fluctuations in commodities like coal, palm oil, and nickel ore, leading to a short-term rise in nickel prices this week. The fundamentals of pure nickel remain weak, as traditional downstream areas such as alloy casting show insufficient consumption momentum. Although export profit margins have opened up, overseas warehouse stock situations continue, and fundamentals are still under some pressure.
This week, the average price difference between high-grade NPI and electrolytic nickel fluctuated and narrowed. In the short term, despite having room for price increases due to supply disruptions and cost support, high-grade NPI’s upward space may be limited due to weaker-than-expected effects in downstream markets. It is expected that the average price difference between high-grade NPI and electrolytic nickel will continue to fluctuate and narrow next week.
From a cost perspective, if the cash cost for high-grade NPI is calculated based on nickel ore prices 25 days ago, smelters' losses have reduced somewhat this week. In terms of raw materials, prices for coke and thermal coal continued to decline this week, influenced by falling downstream steel output and excess upstream supply, leading to a further reduction in accessory material prices. Regarding ores, nickel ore shipments and demand were weak after the Philippine rainy season, with prices remaining stable. The alleviation of smelters' losses this week was mainly due to continued rises in high-grade NPI prices and some easing in accessory material cost lines.
Next week, it is expected that, given the persistent weak downstream demand, accessory materials prices will remain weak and stable. Nickel ore prices should remain stable, and with the focus on an upward shift in the high-grade NPI market, smelters' losses might be further reduced.
![[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)
