This week, the average price of SMM 8-12% high-nickel pig iron reached 1030.25 yuan per nickel point (factory price including tax), an increase of 5.25 yuan per nickel point compared to last week's average. High-nickel pig iron prices continued to show a stable and slightly strong trend this week.
From the supply side, domestically, although Philippines nickel ore shipments have increased, it still takes time for the ore to arrive in China, leading to low inventory levels at domestic smelters. Consequently, the increase in high-nickel pig iron production remains relatively limited. In Indonesia, heavy rainfall in the earlier period restricted nickel ore mining and transportation, keeping smelter raw material inventories low and stabilizing production due to a decline in average ore grade.
On the demand side, spot stainless steel prices have shown strong resilience with good pre-holiday stocking demand. However, due to the continuous rise in raw material prices, stainless steel mills are less willing to procure raw materials, which may lead to downward pressure on high-nickel pig iron prices in the short term.
Additionally, this week, the average discount of high-nickel pig iron compared to electrolytic nickel was 262.38 yuan per nickel point, narrowing by 10.67 yuan per nickel point from last week. The stable and slightly strong operation of high-nickel pig iron prices is mainly attributed to its strong cost support and continued demand from downstream stainless steel.
In terms of pure nickel, prices have continued to show a weaker trend on the macro level this week. News-wise, the policy implementation of Indonesia's nickel industry has been delayed due to the Eid al-Fitr holiday, weakening market trading sentiment. Meanwhile, the strengthening of U.S. tariffs and the rapid rise of the U.S. dollar index have imposed significant pressure on non-ferrous metals, increasing volatility in pure nickel prices.
In the short term, cost support for high-nickel pig iron remains strong, but limited growth in downstream stainless steel consumption weakens price transmission momentum, which could lead to a price adjustment for high-nickel pig iron. As for nickel prices, the fundamentals of pure nickel still maintain an expectation of surplus, but strong wet-process intermediate product coefficients continue to provide cost support, thus limiting the room for price decline.
Next week, the average discount of high-nickel pig iron compared to electrolytic nickel is expected to widen slightly. From a cost perspective, calculating cash cost of high-nickel pig iron from nickel ore prices 25 days ago, profits for high-nickel pig iron smelters have slightly contracted this week. On the raw material side, auxiliary material prices have remained stable overall this week, keeping the auxiliary material cost line for smelters steady.
Moreover, 25 days ago, the Philippines was in its rainy season, leading nickel ore prices to run steadily to slightly strong. The slight decline in smelter profits this week was mainly due to the rise in nickel ore prices. It is expected that next week, auxiliary material prices may weaken amid negative feedback from sluggish downstream steel demand, while nickel ore prices are likely to remain stable. Under limited downstream stainless steel consumption, high-nickel pig iron prices might decline, further weakening smelter profits next week.
