Cobalt Sulphate Prices Rise Significantly, Precursor Plants Become Cautious in Raw Material Procurement [SMM Nickel Morning Meeting Summary]

3.11Nickel Morning Meeting Summary

Refined Nickel:

SMM March 10 News:Spot Premiums/Discounts: The mainstream spot premium quotation range for Jinchuan No. 1 nickel was 1,200-1,500 yuan/mt, with an average premium of 1,350 yuan/mt, down 75 yuan/mt from the previous trading day. The premium/discount quotation range for Russian nickel was -200 to 0 yuan/mt, with an average discount of -100 yuan/mt, down 50 yuan from the previous trading day.

Futures Market: Nickel prices rose after the opening today. As of 11:30, the closing price was 131,339 yuan/mt, up 1.46% from the previous trading day's settlement price, with a high of 132,500 yuan/mt.

Spot Premiums/Discounts: Jinchuan brand nickel fell by 75 yuan compared to the previous trading day. Demand recovery remained weaker than market expectations, prompting traders to lower prices to boost spot market transactions.

From a technical and market sentiment perspective, SHFE nickel futures contracts showed a strong performance. Recent market sentiment was relatively positive, with sentiment continuing to play a dominant role in influencing prices.

Nickel Sulphate Price Spread: Today, nickel briquette prices ranged from 131,100 to 131,400 yuan/mt, with an average price of 131,250 yuan/mt, up 3,400 yuan/mt from the previous day's spot price. Nickel sulphate remained at a discount to refined nickel.

Nickel Sulphate:

March 10, the SMM battery-grade nickel sulphate index price was 27,142 yuan/mt, with a quotation range of 27,100-27,800 yuan/mt, and the average price increased WoW.

On the cost side, recent LME nickel prices rose to $16,435. Meanwhile, the decision by Congo to suspend cobalt exports led to a significant increase in cobalt prices, further driving up the MHP cobalt coefficient. Additionally, MHP sellers showed strong sentiment to stand firm on quotes, with the MHP coefficient continuing to rise, and some traders have stopped quoting. Nickel sulphate costs are expected to continue increasing.On the demand side, last week, due to the sharp rise in cobalt sulphate prices, precursor plants suspended quotations for precursors, leading to cautious raw material procurement. This slowed the procurement pace of precursor plants during traditional procurement periods, despite the current high inventory demand.

On the supply side, rising raw material procurement prices have strengthened nickel salt producers' sentiment to stand firm on quotes. 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 rise further in the short term.

Nickel Pig Iron (NPI):

March 10 News, SMM 8-12% high-grade NPI average price was 996.5 yuan/mtu (ex-factory, tax included), up 4 yuan/mtu from the previous working day.Supply side: Domestically, as the Philippines approaches the end of the rainy season, nickel ore output remains tight, and nickel ore prices are stable. Smelters' production motivation is weak, and production remains at low levels. In Indonesia, some production lines in major production areas have not resumed, and combined with lower-than-expected nickel ore output, overall production remains stable.

Demand side: Stainless steel production schedules are expected to maintain an upward trend. With rising stainless steel scrap prices, the raw material cost-effectiveness has weakened, but downstream demand for high-grade NPI remains optimistic. In the short term, strong cost support for high-grade NPI, coupled with tightening supply and demand, is expected to keep prices relatively stable with a strong trend.

Stainless Steel:March 10 News, according to SMM's in-depth survey, the stainless steel market was active in the morning, with quotations rising, but transactions were average. In the afternoon, transactions improved significantly.

In the futures market, the most-traded stainless steel futures contract SS2505 fluctuated upward. As of 10:30 on March 7, the SS2505 contract price rose significantly to 13,475 yuan/mt, up 25 yuan or 1.6%.

304/2B spot premiums/discounts fluctuated significantly, with Wuxi stainless steel spot premiums ranging from -155 to -145 yuan/mt.

This week, stainless steel spot prices held firm. In the morning, prices rose but transactions were weak, with a wait-and-see sentiment dominating. In the afternoon, as futures prices rebounded, downstream wait-and-see sentiment eased, and purchasing began.

Nickel Ore:

Last week, Philippine medium- to high-grade nickel ore FOB prices pulled back after reaching highs. In the low-nickel high-iron market, as the Philippine rainy season ends, mines are gradually quoting for March shipments. Current FOB transaction prices have softened compared to pre-rainy season levels.

For medium- to high-grade nickel ore, influenced by rising Indonesian ore prices and continuous increases in downstream NPI prices, Philippine mines maintained a sentiment to stand firm on quotes. However, domestic NPI plants' acceptance of high-priced nickel ore remained limited. During the week, Philippine medium-grade nickel ore tender prices slightly declined.

Supply side: The rainy season in southern major mining areas is gradually ending, and Philippine shipments are expected to increase.Demand side: Continuous increases in downstream NPI prices have brought some profit recovery, but NPI plants still face losses, limiting their acceptance of high-priced nickel ore. Currently, just-in-time procurement dominates.Port inventory: Port nickel ore inventory continues to decline.Ocean freight: Some ocean freight rates have reached $11/mt. As the rainy season ends in southern major mining areas, shifts in shipping origins may lead to higher ocean freight rates.In summary, influenced by multiple factors, Philippine nickel ore prices may pull back after previous highs, fluctuating downward.Current market transaction prices: For pyrometallurgical ore, Indonesian nickel ore mainstream premium prices in Sulawesi Island for March were $19-20/wmt. SMM Indonesian domestic trade laterite nickel ore 1.2% (delivery-to-factory price) ranged from $25.5 to $27.5/wmt, up $0.5/wmt WoW, up 1.8% MoM. SMM Indonesian domestic trade laterite nickel ore 1.6% (delivery-to-factory price) ranged from $46.5 to $51.5/wmt, up $0.4/wmt WoW, up 0.9% MoM. Pyrometallurgical ore continued its upward price trend, but the increase narrowed compared to February.Supply: The rainy season in Indonesia's Sulawesi major mining areas will gradually end in March. Indonesian nickel ore supply is expected to increase, but downstream smelters' just-in-time procurement demand persists. Additionally, during Ramadan in March, supply may be affected around Eid al-Fitr.Demand side: Mid-tier smelters have just-in-time procurement needs this month, supporting demand. Inventory: Mid-tier pyrometallurgical enterprises generally maintain inventory levels below two months. March procurement and restocking sentiment remains high, boosting market transaction activity.Hydrometallurgical ore: This year's tight supply rhythm continues. Currently, hydrometallurgical ore delivered to factories in Sulawesi Island is around $26/wmt. With the ramp-up and commissioning of MHP projects this year, downstream demand is expected to increase. However, due to limited quotas, mines prefer to prioritize higher-profit pyrometallurgical ore, actively reducing hydrometallurgical ore sales, leading to faster price increases for hydrometallurgical ore compared to pyrometallurgical ore.Future focus: The impact of the March second-half HPM price, to be announced on the 15th, on Indonesian nickel ore prices, and the actual circulation of domestic trade ore after the rainy season ends. Additionally, the new policy issued by Indonesia's Ministry of Energy and Mineral Resources this week adjusted the HPM pricing method. Although this policy does not directly affect nickel smelters, it has caused some market sentiment disturbances.In summary, Indonesian domestic trade ore prices in March are expected to remain relatively stable with a strong trend. Upstream shipments are expected to increase, and demand persists. However, due to the overall tight supply rhythm of nickel ore, the absolute price of Indonesian nickel ore is expected to rise further, but the pace of increase may slow.