The price of high-grade NPI continues to rise, tight market resources are expected to drive up costs. [SMM Analysis]

During the week, the weekly average price of SMM 8-12% high-grade NPI (ex-factory, tax included) was 1,025 yuan/mtu, up 8.5 yuan/mtu WoW. The Indonesian NPI FOB index also rose 0.7$/mtu WoW. High-grade NPI prices continued to show an upward trend this week.

Supply side, in the domestic market, the continuous rise in ore prices has led to increased production costs. Additionally, raw material inventory remains low, limiting production momentum, thus domestic production remains stable. Meanwhile, in Indonesia, the Morowali Industrial Park was severely affected by heavy rainfall, causing significant flooding, but pyrometallurgy smelters were not significantly impacted, so overall production in Indonesia still maintained a slight increase.

Demand side, the destocking process of stainless steel social inventory is relatively slow, and the purchase willingness of stainless steel mills for raw materials is relatively weak. However, traders remain optimistic about the future market, leading to continued large-scale purchases this week, further tightening the market's high-grade NPI resources. In the short term, high-grade NPI prices are expected to remain relatively stable with a strong trend.

Additionally, the average discount of high-grade NPI to refined nickel this week was 273.05 yuan/mtu, narrowing by 12.55 yuan/mtu WoW. Due to tight market resources and rising cost expectations, high-grade NPI prices further increased this week.

In the refined nickel market, from a macro perspective, due to strong tariff and geopolitical uncertainties, non-ferrous and precious metal prices first pulled back and then rose this week, causing nickel prices to fluctuate. On the news front, the flooding in Indonesia affected the production of hydrometallurgy projects in the Morowali Industrial Park, leading to expectations of continued rising costs for refined nickel, thus strengthening the previously pulling back refined nickel prices.

In the short term, the cost support for high-grade NPI has further strengthened, while supply side, due to tight ore resources, production growth is limited, and price expectations remain strong. Looking ahead, the US tariff situation may further strengthen, benefiting the non-ferrous metal market, and nickel prices are expected to continue upward. Cost side, rising ore prices and intermediate product factors have further increased the cost line for refined nickel. Next week, the average discount of high-grade NPI to refined nickel is expected to narrow slightly.

Raw material side, this week, auxiliary material prices were negatively affected by the continued weakening of downstream black steel prices, with coking coal and coke prices further declining, leading to a downward shift in the cost line for high-grade NPI smelters. Ore side, 25 days ago, the Philippines was still in the rainy season, relying only on some mine outputs, and prices were relatively stable. This week, smelter profits have basically recovered.

Next week, auxiliary material prices may continue to show a weak trend. However, ore prices may rise slightly, so high-grade NPI prices may continue to rise under cost support, although the space is limited, and smelter profits may slightly weaken.

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