High-Nickel Pig Iron Prices on Upward Trend Amid Tight Supply and Rising Demand

During the week, the market average price of SMM 8-12% high-nickel pig iron was 1001.5 yuan per nickel point (ex-factory price, including tax), which represents an increase of 13.7 yuan per nickel point compared to last week. At the same time, the Indonesian NPI FOB index rose by $2.1 per nickel point compared to last week. These changes indicate a continued upward trend in high-nickel pig iron prices this week.

In terms of supply, the domestic market for high-nickel pig iron remains tight. Although the supply of nickel ore from the Philippines is gradually increasing, it still requires time to improve, and domestic smelters are currently relying mainly on depleting previous stocks, thus overall production capacity remains low. In Indonesia, nickel ore inventories at smelters are also low, posing significant challenges to ramping up production. Moreover, a major production smelter is still operating at low capacity, and despite the release of some new capacity, total output has only slightly increased.

On the demand side, the stainless steel market experienced a surge in sentiment this week, with a strong order situation and product prices constantly reaching new highs. Stainless steel mills have shown a significantly increased willingness to purchase raw materials, driving transaction prices for high-nickel pig iron to new heights within the week. In the short term, it is expected that high-nickel pig iron prices will maintain a stable and strong trend.

Additionally, this week the average discount of high-nickel pig iron compared to electrolytic nickel was 321.7 yuan per nickel point, an expansion of 32.2 yuan compared to last week. Nickel prices shook and strengthened during the week, boosting market sentiment for downstream nickel smelting products, with limited supply of good products driving transaction prices higher.

In the pure nickel market, influenced by macroeconomic factors, U.S. economic data did not meet market expectations, and coupled with unclear tariff policies, provided some favorable support for the non-ferrous metals market. At the same time, Indonesia's new nickel ore policies increased market uncertainty regarding the future supply of Indonesian nickel, causing nickel prices to fluctuate upwards.

Overall, in the short term, high-nickel pig iron prices are expected to continue strengthening, supported by expected rises in nickel ore prices. Furthermore, due to increasingly tight market resources, rising cost lines, and tight Indonesian nickel resources, nickel prices are anticipated to have further upward potential, and the average discount of high-nickel pig iron compared to electrolytic nickel may further expand next week.

From a cost perspective, based on nickel ore prices from 25 days ago, high-nickel pig iron smelters are still facing losses. This week, the prices of auxiliary materials halted their decline and stabilized during the gradual recovery phase of the commodity market in March, and the cost line for nickel pig iron auxiliary materials temporarily stabilized. In terms of ore, as the downstream purchasing cycle begins, the supply of nickel ore from the Philippines is relatively low, causing prices to rise slightly.

The loss margin for smelters has decreased compared to last week. It is expected that next week, the prices of auxiliary materials will remain stable for a period, while nickel ore prices may rise due to the impact of the Philippine rainy season. Against the backdrop of a tight market for circulating goods, high-nickel pig iron prices may continue to rise, and the profit loss for smelters is likely to be further alleviated.