Stainless Steel Market Continues to Rise While Downstream Merchants Lack Confidence [SMM Nickel Morning Brief]

3.13 Nickel Morning Briefing Refined Nickel: SMM March 12 News: Spot Premiums/Discounts: The mainstream spot premium quotation range for Jinchuan No. 1 nickel was 1,200-1,300 yuan/mt, with an average premium of 1,250 yuan/mt, down 50 yuan/mt from the previous trading day. The quotation range for Russian nickel was -200 to 0 yuan/mt, with an average discount of -100 yuan/mt, up 50 yuan from the previous trading day. Futures: Nickel prices rose after the opening. As of 11:30, the closing price was 132,550 yuan/mt, up 0.20% from the previous trading day's settlement price, with a high of 132,780 yuan/mt. Spot Premiums/Discounts: The premium for Jinchuan nickel continued to decline by 50 yuan from the previous trading day. Traders adopted a strategy of lowering prices to promote transactions, but the results were moderate. End-users remained mostly on the sidelines. From a technical and market sentiment perspective, SHFE nickel futures contracts fluctuated upward. In the short term, sentiment continues to have a greater impact on market prices than fundamentals. Nickel Sulphate Price Spread: Today, nickel briquette prices were 131,200-131,500 yuan/mt, with an average price of 131,350 yuan/mt, up 300 yuan/mt from the previous trading day's spot price. Nickel sulphate remains at a discount to refined nickel. Nickel Sulphate: March 12, the SMM battery-grade nickel sulphate index price was 27,332 yuan/mt, with a quotation range of 27,280-27,980 yuan/mt, and the average price increased compared to last week. Cost Side: Recently, LME nickel prices fluctuated at high levels in the short term. Meanwhile, the suspension of cobalt exports from Congo caused a significant rise in cobalt prices, pushing up the cobalt coefficient in MHP. Additionally, MHP sellers showed strong sentiment to stand firm on quotes, with the MHP coefficient continuing to rise, and some traders have stopped quoting. The cost of nickel sulphate is expected to continue increasing. Demand Side: Last week, due to the significant 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, though demand still exists. Supply Side: 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 rise further in the short term. NPI: March 12, SMM 8-12% high-grade NPI average price was 1,000 yuan/mtu (ex-factory, tax included), up 2.5 yuan/mtu from the previous working day. Supply Side: Domestically, as the rainy season in the Philippines nears its end, nickel ore output remains tight, and nickel ore prices are stable. Smelters have weak production incentives, and production remains at low levels. In Indonesia, some production lines in major production areas have not significantly recovered, 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. The price increase of stainless steel scrap has weakened the raw material cost-effectiveness, but 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 12, according to SMM research, stainless steel market prices continued to rise. Futures: The most-traded 2505 contract fluctuated around 13,490 yuan/mt in the early session and then surged to 13,550 yuan/mt. As of 10:30, the SS2505 contract was quoted at 13,490 yuan/mt, up 25 yuan. Spot Market Prices: In Wuxi, the 304/2B spot premiums/discounts ranged from -120 to 200 yuan/mt. Spot market prices rose, with steel mills and traders firm in their quotations, generally raising prices by 50-100 yuan/mt. Actual transaction prices for the 300 series increased by 20-50 yuan/mt. Market sentiment was bullish, and spot traders were active in shipments and restocking. However, downstream enterprises were cautious, only making just-in-time procurement. On the day, inquiries for stainless steel in the Wuxi market increased, low-priced resources decreased, and merchants mostly stabilized or raised prices for shipments. Both the 300 and 400 series saw varying degrees of price increases. In Foshan, spot prices rose slightly, but transactions remained sluggish. Downstream buyers lacked confidence in price increases and were minimally stimulated by favourable macro factors, maintaining cautious procurement operations. Nickel Ore: Last week, FOB prices for medium- to high-grade nickel ore from the Philippines pulled back after reaching highs. In the low-nickel high-iron market, as the rainy season in the Philippines ends, mines are gradually offering March shipments, and current FOB transaction prices have eased compared to pre-rainy season levels. For medium- to high-grade nickel ore, Indonesian ore price increases and rising NPI prices have supported the sentiment to stand firm on quotes among Philippine mines. However, domestic NPI plants have limited acceptance of high-priced nickel ore, leading to a slight decline in tender prices for medium-grade nickel ore last week. Supply Side: The rainy season in southern major mining areas in the Philippines is gradually ending, and subsequent shipments are expected to increase. Demand Side: Rising NPI prices have brought some profit recovery, but NPI plants continue to face losses, limiting their acceptance of high-priced nickel ore. Currently, procurement is mainly just-in-time restocking. Port Inventory: Nickel ore port 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 shipment locations may lead to higher ocean freight rates. In summary, due to various factors, Philippine nickel ore prices may pull back after previous highs and fluctuate downward. Current Market Transaction Prices: For pyrometallurgical ore, Indonesian nickel ore's mainstream premium price for Sulawesi Island was $19-20/wmt. SMM Indonesian domestic laterite nickel ore 1.2% (delivery-to-factory price) ranged from $25.5-27.5/wmt, up $0.5/wmt WoW, a 1.8% increase. SMM Indonesian domestic laterite nickel ore 1.6% (delivery-to-factory price) ranged from $46.5-51.5/wmt, up $0.4/wmt WoW, a 0.9% increase. Pyrometallurgical ore continued its price increase trend, though the growth rate narrowed compared to February. Supply: The rainy season in Indonesia's Sulawesi major mining areas is expected to end in March, with increased nickel ore supply anticipated. However, downstream smelters still have just-in-time procurement needs. Additionally, during Ramadan, supply may be affected around Eid al-Fitr. Demand Side: Mid-tier smelters have just-in-time procurement needs this month, supporting demand. Inventory levels at mid-tier pyrometallurgical enterprises generally remain below two months, and March procurement and restocking sentiment is relatively high, boosting market transaction activity. Hydrometallurgical Ore: The tight supply rhythm continues this year. Currently, hydrometallurgical ore for Sulawesi Island is delivered to factories at approximately $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: Attention should be paid to the impact of the March HPM price announcement on the 15th on Indonesian nickel ore prices, as well as the actual circulation of domestic trade ore after the rainy season. Additionally, the new policy issued by Indonesia's Ministry of Energy and Mineral Resources this week, which adjusts the HPM pricing method, has caused some market sentiment disturbances, though it does not directly affect nickel smelters. In summary, March Indonesian domestic ore prices are expected to remain 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, though the growth rate may slow.