Cobalt Coefficient in MHP Rises, Sentiment to Stand Firm on Quotes Grows Stronger Among Nickel Salt Smelters [SMM Nickel Morning Meeting Summary]

3.3Nickel Morning Meeting Summary

Refined Nickel:

Last week, nickel prices exhibited a fluctuating trend, with refined nickel prices experiencing significant intra-week volatility. The mainstream spot premiums for Jinchuan No. 1 nickel ranged from 1,500-2,000 yuan/mt, with average premiums fluctuating between 1,600-1,950 yuan/mt. On February 28, after the contract switched to 2504, nickel prices initially declined in the morning but later rebounded, closing at 126,864 yuan/mt, up 1.50% from the previous trading day. On the macro front, with the upcoming Two Sessions in China, the market generally anticipates the introduction of favorable policies. However, the global economic environment remains weak, downstream stainless steel and battery demand growth is sluggish, and the surplus in nickel inventory has tilted the supply-demand balance towards a supply surplus, which is unfavorable for nickel price increases. On the fundamentals, Indonesia has approved 207 RKABs, and mine shipments are proceeding normally. Domestic trade ore supply is relatively ample, but as downstream smelters deplete their inventories, concentrated stockpiling is expected after the Chinese New Year. The FOB prices of medium- to high-grade nickel ore in the Philippines have continued to rise post-holiday, driven by reduced supply due to the rainy season and stronger sentiment to stand firm on quotes from mines. Nickel ore prices are likely to fluctuate upward in the future. For the coming week, SHFE nickel prices may continue to be constrained by supply-demand dynamics and policy uncertainties. Market sentiment awaits favorable news or policy-driven demand stimulation from the Two Sessions.

Nickel Sulphate:

Last week, the nickel salt market saw a slight rebound, with cost support widening. On the supply side, early in the week, LME nickel price declines reduced costs for nickel salt smelters, leading to minor price concessions. However, by the weekend, with LME nickel prices rebounding and the DRC halting cobalt exports, the coefficient of cobalt in MHP increased, raising production costs for nickel salt smelters. This heightened sentiment to stand firm on quotes, pushing up prices. On the demand side, although ternary cathode precursor producers' March production schedules fell short of expectations, they showed improvement compared to February. This week marked the traditional peak season for nickel salt procurement, and precursor plants had yet to complete their March nickel salt inventory replenishment, sustaining procurement demand. Market inquiries and transactions were relatively active. Additionally, changes in raw materials, particularly the MHP coefficient and rising LME nickel prices, further increased production costs, intensifying producers' sentiment to stand firm on quotes. Overall, rising market demand and costs jointly drove nickel salt prices upward. Considering these factors, the nickel salt market showed a slight upward trend last week, and prices are expected to have further room for growth in the short term.

Nickel Pig Iron (NPI):

Last week, the average price of SMM 8-12% high-grade NPI increased WoW, and the Indonesian NPI FOB index also rose. The high-grade NPI market overall showed an upward trend, with low-priced resources gradually disappearing and transaction prices repeatedly hitting new highs. On the supply side, domestic smelters remained in a loss-making phase, with production schedules expected to operate at low levels and limited production enthusiasm. In Indonesia, major production areas adjusted production rhythms to lower operating loads. High-grade nickel ore resources were tight, with declining grades in key production areas, and metal content is expected to decrease. Stainless steel spot prices continued to decline, with sluggish market transactions. Stainless steel mills, having previously stocked inventories and benefited from improved stainless steel scrap economics, showed weakened demand for high-grade NPI. In summary, in the short term, NPI prices are expected to remain relatively stable with a strong trend, supported by costs and tight spot supply.

Stainless Steel:

Last week, the stainless steel 2505 futures contract prices showed a fluctuating trend. Data on the costs, prices, and profit margins of 304 stainless steel cold-rolled coils indicated continued declines in costs and prices, compressing profit margins. The market's supply-demand imbalance was evident, with weak demand and relatively ample supply. In the short term, the stainless steel market may maintain its current pattern, posing challenges to corporate profitability. From a raw material perspective, price fluctuations in key inputs such as high-grade NPI, imported nickel plates, and stainless steel scrap significantly impacted stainless steel production costs. On February 28, high-grade NPI transaction prices rose, with an Indonesian nickel iron plant transacting at 995 yuan/nickel (tax-included, ex-warehouse), involving tens of thousands of mt, with delivery scheduled for late March. The profit margins for 304 cold-rolled stainless steel remained low, even negative, with cold-rolled coil producers facing significant cost pressures and profit compression. Cost reductions may stem from lower raw material prices, improved production processes, or economies of scale. Meanwhile, price declines were primarily due to relatively ample market supply and persistently weak demand. Downstream industries such as construction and home appliances showed limited purchase willingness, intensifying market competition and making price increases difficult.