【SMM Analysis】Weekly Review of Indonesian Nickel Market-4.25

NICKEL ORE

Indonesian ore prices remained stable with a slight upward trend in pyrometallurgy, while hydrometallurgical ore prices may experience a downward adjustment.

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

For pyrometallurgical ore, supply side, the rainy season in Sulawesi has been prolonged, with frequent rainfall during the week, slowing the recovery of nickel ore supply in the region. Demand side, downstream NPI enterprises still have just-in-time procurement needs, and smelters' raw material stocking in Q1 was not smooth, leading to continued tight supply of nickel ore. Policy side, the nickel royalty under the PNBP policy was raised and officially implemented on April 26, increasing the sales cost of nickel ore. Overall, pyrometallurgical ore prices are expected to remain stable with a slight upward trend.

For hydrometallurgical ore, supply side, the tight supply situation was not significant during the week. Demand side, the accident at the large K park's hydrometallurgical project affected the demand for hydrometallurgical ore from HPAL smelters in April. Overall, hydrometallurgical ore prices are expected to be in the doldrums, possibly experiencing a slight decline.

Looking ahead, SMM expects HPM prices to drop slightly in the first half of May, but the PNBP policy, which will be implemented on the 26th, will provide some support for nickel ore prices. Coupled with the continued tight supply of nickel ore and low inventory levels among downstream enterprises, procurement sentiment remains strong. Pyrometallurgical ore prices are unlikely to decline, and premiums may remain stable or increase to maintain the absolute price of nickel ore. For hydrometallurgical ore, SMM expects the mainstream procurement price to experience a slight decline in May.

High-Grade NPI

The supply-demand imbalance of high-grade NPI may emerge, and prices are likely to remain in the doldrums.

The FOB price in Indonesia was $116.6/mtu, down $1.77/mtu WoW. This week, the price center of high-grade NPI further declined. Supply side, in Indonesia, the production pace in the main producing areas remained relatively stable overall, but the decline in medium and high-grade ores led to a decrease in metal content. Some high-cost production lines may see a decline in operating rates due to expanding losses, and it is expected that Indonesia's production may experience a slight decline. Demand side, the transaction atmosphere in the downstream stainless steel market was sluggish, and under the impact of Trump's "reciprocal tariff," market expectations for future stainless steel prices were weak. Steel mills mainly purchased raw materials based on immediate needs, and transaction prices in the market hit new lows within the week. It is expected that the negative feedback from stainless steel will continue in the short term, and high-grade NPI prices will remain under pressure.

Cost side, 25 days ago, nickel ore prices remained stable, and the losses of high-grade NPI deepened. Based on the nickel ore prices 25 days ago, the cash cost of high-grade NPI smelters deepened losses within the week. Raw material side, auxiliary material prices stopped falling and stabilized this week. Driven by the gradual resumption of real estate and infrastructure, pig iron production began to rebound, supporting the prices of coking coal and coke as well as thermal coal. The auxiliary material cost line of high-grade NPI smelters remained stable within the week. Ore side, 25 days ago, the rainy season ended in most parts of the Philippines, but against the backdrop of strong downstream demand, nickel ore prices remained generally stable with a slight rise. This week, the losses of smelters further deepened, mainly due to the further decline in high-grade NPI prices. It is expected that next week, auxiliary material prices will remain strongly supported by the increase in pig iron production from downstream steel mills, and the auxiliary material cost line will remain stable. Nickel ore side, prices are expected to remain generally stable with a slight rise due to tight nickel ore supply. It is expected that the losses of high-grade NPI smelters will continue to expand next week.