Indonesian Ore Output Falls Short of Expectations, Stainless Steel Market to Remain Weak and Volatile [SMM Nickel Morning Meeting Summary]

3.25 Nickel Morning Meeting Summary Refined Nickel: SMM March 24 News: Spot premiums and discounts: The mainstream spot premium quotation range for Jinchuan No.1 nickel was 1,900-2,200 yuan/mt, with an average premium of 2,050 yuan/mt, up 100 yuan/mt from the previous trading day. The premiums and discounts for Russian nickel ranged from -150 to 100 yuan/mt, with an average discount of -25 yuan/mt, up 25 yuan/mt. Futures: Today, nickel prices fluctuated considerably after the opening. As of 11:30, the closing price was 129,740 yuan/mt, down 0.05% from the previous trading day's settlement price, with a low of 128,640 yuan/mt. In terms of spot premiums and discounts, the Jinchuan brand nickel rose 100 yuan/mt from the previous trading day. Traders chose to raise premiums appropriately to gauge market demand. From a technical perspective, SHFE nickel futures contracts fluctuated higher after the opening, mainly influenced by the frequent adjustments in Indonesia's nickel industry policies, which may push nickel prices upward. Regarding the price spread with nickel sulphate: Today, the SMM1# refined nickel price was 128,600-131,500 yuan/mt, with an average price of 130,050 yuan/mt, down 550 yuan/mt from the previous trading day. The price spread was approximately 2,231 yuan/mt (Ni contained), with nickel sulphate still at a discount to refined nickel. Nickel Sulphate: On March 24, the SMM battery-grade nickel sulphate index price was 27,926 yuan/mt, with the quotation range for battery-grade nickel sulphate at 27,900-28,420 yuan/mt, with the average price rising slightly WoW. In terms of costs, the transaction coefficient for MHP recently increased slightly. For auxiliary materials, the price of sulphuric acid rose slightly, leading to a slight increase in MHP costs. On the demand side, this week is a traditional procurement period, with precursor plants stockpiling, increasing their acceptance of nickel sulphate prices. From a supply perspective, nickel salt smelters' inventories remain at low levels, with a tight circulation of nickel salts in the market, and a strong sentiment to stand firm on quotes. Currently, buyers and sellers are still negotiating prices, and it is expected that there is still room for price increases in the short term, but the increase will be limited. NPI: On March 24, the SMM 8-12% high-grade NPI average price was 1,022.5 yuan/mtu (ex-factory, tax included), up 2.5 yuan/mtu from the previous working day. Supply side, domestically, smelter raw material inventories are running low, and shipments from the Philippines, nearing the end of the rainy season, still need time to arrive. Some smelters have production lines under maintenance, keeping production at low levels. In Indonesia, nickel ore mining and output were below expectations, with some smelters' raw material inventories also low. Additionally, some production lines in the main producing areas are operating at low capacity, resulting in limited production growth despite new capacity releases. On the demand side, stainless steel spot performance was weak, and the price of stainless steel scrap decreased, restoring some economic advantages, putting pressure on NPI prices. A large stainless steel mill in South China saw a significant increase in its tender price compared to the previous period, and it is expected that NPI will continue to fluctuate stably in the short term. Stainless Steel: According to SMM research, on March 24, the overall stainless steel market price remained stable with minor fluctuations. Due to a major plant conducting safety inspections, 200 series stainless steel prices increased. 300 series cold-rolled 304 stainless steel prices stabilized with a slight decline. Market transactions were sluggish. The most-traded contract 2505 fluctuated rangebound. At 10:30 AM, SS2505 quoted 13,380 yuan/mt, down 35 yuan/mt. In Wuxi, the spot premiums and discounts for 304/2B were in the range of 140-340 yuan/mt. In today's stainless steel spot market, 201/2B coil prices in Wuxi slightly increased, with the average price dropping to 7,770 yuan/mt, up 5 yuan/mt from last Friday; in Foshan, the average price was 7,780 yuan/mt, up 10 yuan/mt. For 304/2B coil edge-cut prices, the Wuxi average was 13,920 yuan/mt, and the Foshan average was 13,820 yuan/mt, both down 10 yuan/mt. Prices for other series of stainless steel products remained stable. It is expected that stainless steel market prices will continue to fluctuate weakly. Nickel Ore: Last week, the prices of low and high-grade nickel ore from the Philippines remained stable, while the prices of medium and high-grade Philippine ore saw a slight increase, mainly due to two factors: 1. The price of Indonesian nickel ore, as an export country for the Philippines, climbed and is expected to rise further, providing support for the export price of Philippine nickel ore. 2. From a supply and demand perspective, the Surigao region began reporting and shipping, but the supply recovery was slow due to weather conditions. Domestically, most nickel pig iron smelters' inventories are still at low levels, with a strong demand for just-in-time procurement of raw materials. Although the recent rise in high-grade NPI prices has brought some profit recovery, domestic smelters are still incurring losses, limiting their ability to accept high-priced nickel ore. Ocean freight rates, affected by the shift in shipping locations and poor weather, rose again, further increasing the import cost of nickel ore. Overall, the strong supply and weak demand pattern, combined with policy disruptions, led to a slight increase in Philippine prices. SMM expects that subsequent Philippine ore prices may stabilize and trend upward. Last week's market transaction prices: For pyrometallurgy ore, the SMM weekly price for Indonesia's local ore 1.6% was $49.5/wmt. For hydrometallurgy ore, the SMM weekly price for Indonesia's local ore 1.2% grade was $26.5/wmt. The mainstream premiums for pyrometallurgy Indonesian nickel ore in March held steady at $19-21/wmt. CIF prices rose slightly, mainly due to the benchmark price for Indonesia's local ore in the second half of March, released by the Indonesian Ministry of Energy and Mineral Resources on the 15th, which saw a slight increase. The 1.2% grade ore rose $0.26, and the 1.6% grade rose $0.46. From a supply perspective, the extended rainy season in Sulawesi this year has impacted nickel ore mining and transportation, slowing the supply recovery in main mining areas like Sulawesi. Additionally, the Eid al-Fitr holiday at the end of March exacerbated the supply tightness. On the demand side, Indonesian NPI smelters generally have low inventories and still have a need for just-in-time restocking, with high downstream purchasing sentiment. SMM expects that the supply of nickel ore may continue to be tight. Policy-wise, the Indonesian Ministry of Energy and Mineral Resources signaled last week that the PNBP policy might be implemented before Eid al-Fitr. If the policy is implemented as scheduled, the sales cost for nickel ore mines will increase, and with the continuous rise in NPI and MHP prices, the bargaining power of the mine side is currently strong. The increased costs from this policy may be largely passed on to downstream enterprises, strongly supporting nickel ore prices. Overall, SMM expects that the price of Indonesia's local nickel ore may continue to rise.