This week, the average price of SMM 8-12% high-nickel pig iron (NPI) was 974.7 yuan per nickel point (tax included, ex-factory), down 14.2 yuan per nickel point from last week. The FOB price in Indonesia was $116.6 per nickel point, down $1.77 per nickel point from last week, indicating a continued downward shift in high-nickel pig iron prices.
From the supply perspective, domestic smelters have shown a low enthusiasm for raw material purchases amid falling finished product prices. Combined with weakened production drivers, short-term output may decline. In Indonesia, the production pace in major production areas remains generally stable, but the reduction in medium-high grade output has led to a decrease in metal volume. The operating rate of high-cost production lines has also dropped due to expanding profit losses, potentially leading to a slight decline in high-nickel pig iron output in Indonesia.
On the demand side, the downstream stainless steel market transactions have been tepid, further impacted by the "reciprocal tariffs" policy introduced by the Trump administration. The market holds a pessimistic outlook on stainless steel prices. Steel mills mainly purchase raw materials out of necessity, and market transaction prices have hit new lows this week. Negative feedback in the stainless steel market is expected to continue in the short term, putting downward pressure on high-nickel pig iron prices.
This week, the average discount of high-nickel pig iron compared to electrolytic nickel was 283.3 yuan per nickel point, an increase of 22.95 yuan per nickel point from last week. This reflects further weakening of high-nickel pig iron prices under the softening downstream stainless steel market.
Regarding pure nickel, macroeconomic factors, including the weakening U.S. economic indicators triggered by Trump’s tariff policies, have led to market uncertainty. Despite an expected surplus in pure nickel supply and demand, recent low price rebounds and improved market transaction sentiment have provided some support to the weak fundamentals, with nickel prices remaining in a narrow fluctuation range throughout the week.
In the short term, with weak downstream demand, the supply-demand conflict in high-nickel pig iron may intensify, leading to further price declines. While tight intermediate supply forms a strong cost support for pure nickel, anticipated surplus conditions mean prices are expected to continue fluctuating within a narrow range. The discount on high-nickel pig iron compared to electrolytic nickel may widen further next week.
From a cost perspective, the cash cost for high-nickel pig iron calculated based on nickel ore prices 25 days ago has reversed further this week. Auxiliary material prices have stabilized after a decline, supported by the resumption of real estate and infrastructure projects, leading to a recovery in molten iron production, which in turn supports the prices of metallurgical coke and thermal coal. Thus, the auxiliary material cost line for high-nickel pig iron smelters remains stable. On the mining end, with the rainy season ending in most parts of the Philippines 25 days ago and strong downstream demand, nickel ore prices have been running steadily stronger. The deepening cost inversion for smelters this week is primarily due to the further decline in high-nickel pig iron prices.
Next week, supported by the uptick in molten iron output from downstream steel mills, auxiliary material prices are likely to remain robust and the auxiliary cost line stable. With tight supply, nickel ore prices are expected to remain steadily strong. Hence, the losses for high-nickel pig iron smelters may further expand.
