High-Nickel Pig Iron Faces Largest Single-Week Decline This Year Amid Macro and Market Shifts

During the week, the weekly average price of SMM 8-12% high-nickel pig iron was RMB 1,010.9 per nickel point (ex-factory, tax-included), down RMB 19.35 per nickel point from the previous week's average price, marking the largest single-week decline this year. The market price downtrend is evident and the transaction focus continues to shift downward.

On the supply side, in the domestic market, as the rainy season in the Philippines has basically ended, the number of shipments has increased significantly compared to the previous period, which has relieved the shortage of nickel ore in domestic smelters. However, as market prices are close to the cost line, most smelters maintain a low operating rate, and production remains low. In Indonesia, after the end of the Eid al-Fitr holiday, the production load of smelters gradually recovered and the supply of raw materials increased. However, due to the unclear policy on increasing the nickel ore tax rate, the production situation in the main production areas remains stable.

On the demand side, after the Qingming Festival, affected by Trump's "reciprocal tariffs" policy, the global commodity economy has entered a short-term decline. Stainless steel market prices have fallen to their lowest point in recent years, and stainless steel factories have a weaker outlook for the future market, thus their procurement of raw materials is more cautious. Additionally, some traders have shown panic, leading to frequent low-price sales. Therefore, high-nickel pig iron prices are expected to remain under pressure in the short term.

From an economic standpoint of raw materials, the price of high-nickel pig iron this week averaged RMB 192.9 per nickel point lower than electrolytic nickel, with the discount narrowing by RMB 69.48 per nickel point from the previous week. The rapid decline in high-nickel pig iron prices was mainly influenced by macroeconomic factors, particularly the rapid decline in stainless steel prices, which negatively impacted the raw material market. Despite tight supply and demand conditions, high-nickel pig iron prices still saw a significant drop.

In the pure nickel market, affected by macro factors, the implementation of Trump's "reciprocal tariffs" policy during the Qingming Festival had a negative impact on the non-ferrous metals market, leading to a sharp decline in domestic and foreign nickel prices, with London Metal Exchange (LME) nickel prices falling to a recent low. Fundamentally, although pure nickel production is increasing, demand in downstream sectors such as alloy, foundry, and stainless steel is weakening due to macroeconomic uncertainties, further deepening the expectation of supply surplus and putting downward pressure on pure nickel prices.

In the short-term outlook, the impact of macroeconomic factors on the high-nickel pig iron and pure nickel markets remains, with the negative feedback from the stainless steel market continuing to put pressure on high-nickel pig iron prices, causing them to further decline. From the pure nickel perspective, the potential increase in Indonesia's nickel ore tax may support pure nickel costs, coupled with a short-term weakening of intermediate product supply, pure nickel prices might see a corrective increase. It is expected that next week, the average discount between high-nickel pig iron and electrolytic nickel may widen again.

On the cost side, based on nickel ore prices from 25 days ago, the cash cost of high-nickel pig iron further weakened compared to the pre-holiday period. Although auxiliary material prices remained stable this week, given the increase in iron water production from downstream steel plants and medium-to-low inventory levels of coking coal and thermal coal, the auxiliary material cost line for smelters remained stable this week. Regarding nickel ore, since the Philippines was in the rainy season 25 days ago, nickel ore prices remained stable, but with the expected improvement in the supply tightness of Philippine nickel ore, prices may stay stable. Overall, under the expectation of weak high-nickel pig iron prices next week, smelters may face losses again.