Weekly Review of the Nickel Ore Market: Indonesian Ore and Pyrometallurgical Ore Remain Stable with a Slight Upward Trend, While Hydrometallurgical Ore Prices May Face a Decline

The contradiction between the high-priced offers from the Philippines and the declining acceptance of high-priced nickel ore by domestic NPI enterprises has formed.

This week, the FOB price of Philippine nickel ore rose, while the CIF price remained stable with a slight increase. From the perspective of supply and demand, the rainy season in the southern Philippines has basically ended, and shipments of medium-grade nickel ore from mines in the Surigao region are expected to increase. On the demand side, domestic NPI prices continued to decline during the week, and domestic smelters' acceptance of high-priced nickel ore decreased. From the inventory perspective, the inventory of domestic nickel-iron plants remains relatively low, and just-in-time procurement demand still exists, but the acceptance of nickel ore prices is limited. In terms of cost, the transaction price of 1.3% nickel ore in the Philippines mostly exceeded $35/wmt FOB during the week, and the import cost of nickel ore increased again. Overall, the current high-priced offers from the Philippines and the declining acceptance of high-priced nickel ore by domestic NPI enterprises have created a contradiction, leaving NPI plants in a dilemma when purchasing raw materials. In terms of ocean freight rates, the rates rose slightly during the week, with the rate from Surigao to Lianyungang, China, at around $10.5-11/wmt. Regarding exports from the Philippines to Indonesia, the export volume continues to increase, and the price of Indonesian nickel ore remained stable and strong during the month, providing some support to the price of Philippine nickel ore. Overall, SMM expects that the price of Philippine nickel ore may hold up well in the future.

Indonesian pyrometallurgical ore remained stable and strong, while hydrometallurgical ore prices may see a downward adjustment.

The price of Indonesian ore remained stable overall this week. For pyrometallurgical ore, upstream and downstream are negotiating the premium for May, and the transaction price remained stable this week. The mainstream premium for pyrometallurgical ore in Sulawesi continued at $24-26, and the delivery-to-factory price for SMM's Indonesian local ore with 1.6% content was $51.5-53.5/wmt. For hydrometallurgical ore, prices showed a slight loosening, with the delivery-to-factory price for SMM's Indonesian local ore with 1.2% content at $23.5-24.5/wmt.

For pyrometallurgical ore: On the supply side, the rainy season in Sulawesi has lasted longer, and precipitation remained frequent during the week, slowing the recovery of nickel ore supply in Sulawesi. On the demand side, downstream NPI enterprises still have just-in-time procurement demand, and the raw material stocking of smelters in Q1 was not smooth, so the tight supply of nickel ore continues. In terms of policy, the nickel royalty in the PNBP policy was raised and officially implemented on April 26, which has increased the sales cost of nickel ore. Overall, the price of pyrometallurgical ore may remain stable and strong.

For hydrometallurgical ore: On the supply side, the tight supply of hydrometallurgical ore was not obvious during the week. On the demand side, the accident at the hydrometallurgical project in the Sulawesi Industrial Park affected the demand for hydrometallurgical ore by HPAL smelters in April. Overall, the price of hydrometallurgical ore may be in the doldrums and could see a slight downward adjustment.

Subsequently, SMM expects that the HPM price will drop slightly in the first half of May, but the PNBP policy will be implemented on the 26th, providing some support to nickel ore prices. Coupled with the continued tight supply of nickel ore and the low inventory of downstream enterprises, the procurement sentiment is strong, and the price of pyrometallurgical ore may be difficult to decline, with the premium remaining stable or rising to maintain the absolute price of nickel ore. For hydrometallurgical ore, SMM expects that the mainstream purchase price will see a slight downward adjustment in May.

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