Nickel sulphate has strong cost support, and nickel salt prices will rise mildly in the short term [[SMM] Nickel Morning Meeting Summary]

4.29 Nickel Morning Meeting Summary

Macro News:

(1) The final value of the US one-year inflation rate expectation surged from 5.0% last month to 6.5% this month, the highest level since 1980, marking a significant increase of 0.5 percentage points or more in inflation expectations for four consecutive months. Long-term inflation expectations climbed from 4.1% in March to 4.4% in April. The immediate forecast for core CPI inflation stands at 2.941%. Although this figure is lower than the core PCE inflation rate, it remains above the US Fed's long-term target.

(2) Sources indicate that the European Central Bank's (ECB) policymakers are increasingly confident in cutting interest rates in June in response to persistent declines in inflation, though they will not implement a substantial cut. Last week, several ECB Governing Council members attended the International Monetary Fund (IMF) and World Bank Spring Meetings, discussing the potential deterioration of the eurozone and global economies due to US tariffs. Meanwhile, the latest economic data released in the eurozone also reflect this phenomenon. As for inflation, there is no indication of deterioration due to tariffs for the time being.

Refined Nickel:

Spot Market: The SMM 1# refined nickel price ranges from 125,600 to 127,950 yuan/mt, with an average price of 126,775 yuan/mt, down 175 yuan/mt from the previous trading day. The mainstream spot premium quotation for Jinchuan No.1 nickel ranges from 2,000 to 2,300 yuan/mt, with an average premium of 2,150 yuan/mt, up 50 yuan/mt from the previous trading day. The premium and discount quotation for Russian nickel ranges from 100 to 300 yuan/mt, with an average premium of 200 yuan/mt, up 50 yuan/mt from the previous trading day.

Futures Market: The most-traded SHFE nickel contract opened slightly lower in the morning session, with the lowest price dipping to 125,500 yuan/mt. As of 11:30, the closing price was 125,770 yuan/mt, up approximately 0.06% from the settlement price of the previous trading day.

Expectations for a US Fed interest rate hike in June have intensified, coupled with a rebound in US manufacturing data, putting pressure on LME nickel prices denominated in US dollars. Currently, nickel prices are influenced by multiple macro factors, including the Sino-US tariff dispute, adjustments to Indonesian policies, and tightening US dollar liquidity, with cost support and surplus pressure coexisting.

Nickel Sulphate:

On April 28, the SMM battery-grade nickel sulphate index price was 27,815 yuan/mt, with a quotation range for battery-grade nickel sulphate of 27,820-28,340 yuan/mt, and the average price remained stable compared to the previous day.

Cost Side: LME nickel prices have recently been supported by costs and influenced by Indonesian policies, providing strong cost support for nickel sulphate. Additionally, due to production cuts in Indonesian MHP and high-grade nickel matte projects, the supply of raw materials is tight, pushing the MHP coefficient to remain at high levels with insufficient downward momentum. Supply Side: Some nickel salt smelters have limited quantities available for external sale in May, leading to firm quotations. Some nickel salt smelters have expectations for production cuts due to incomplete raw material stocking. Moreover, with raw material prices fluctuating at highs, their prices remain firm. Demand Side: As the circulation of nickel sulphate produced from low-cost recycled materials has largely been exhausted, the inquiry activity of precursor plants for nickel sulphate produced from primary materials has increased this week. Additionally, the price acceptance of precursor plants for nickel sulphate has also improved. Looking ahead, based on fundamental factors such as tight raw material supply, stable cost support, and downstream demand dependence, nickel sulphate prices are expected to show a mild upward trend in the short term.

Nickel Pig Iron (NPI):

On April 28, the SMM 8-12% high-grade NPI average price was 967.5 yuan/mtu (ex-factory, tax included), down 1.5 yuan/mtu from the previous working day. Supply Side: Domestically, smelter profits have begun to shrink, and the extent of losses for some high-cost smelters has deepened, resulting in weak production incentives and low output. In Indonesia, premiums for Indonesia's local ore have remained stable, and smelter cost lines have generally held up well. However, the decline in spot prices has breached the cost lines of some smelters, leading to weakened production incentives similar to those in China, with overall output remaining stable. Demand Side: Stainless steel spot prices are at low levels in recent years, and immediate raw material costs are high, resulting in losses. In the short term, downstream stainless steel mills have weak demand for raw material procurement, and the center of gravity for market transactions continues to move downward. It is expected that high-grade NPI prices will remain under pressure in the short term.

Stainless Steel:

On April 28, SS futures started with a low opening and rebounded after the daytime session opened. Affected by the decrease in stainless steel mills' plate prices last Friday, stainless steel spot prices generally declined today. Despite the price decline and the approaching Labour Day holiday, due to the continuous weakness in downstream demand, the transaction atmosphere in the stainless steel market remains sluggish, with no significant release of pre-holiday stockpiling demand observed.

Futures: The most-traded 2506 contract stopped falling and began to rebound. At 10:30 a.m., SS2506 was reported at 12,665 yuan/mt, down 5 yuan/mt from the previous trading day. In the spot market, the premium and discount for 304/2B in Wuxi ranged from 355 to 555 yuan/mt. In the spot market, cold-rolled 201/2B coils in Wuxi and Foshan were both reported at 8,100 yuan/mt; cold-rolled cut edge 304/2B coils had an average price of 12,950 yuan/mt in Wuxi and 13,000 yuan/mt in Foshan; cold-rolled 316L/2B coils were priced at 23,550 yuan/mt in Wuxi and 23,650 yuan/mt in Foshan; hot-rolled 316L/NO.1 coils were both reported at 22,775 yuan/mt in Wuxi and Foshan; cold-rolled 430/2B coils were both priced at 7,500 yuan/mt in Wuxi and Foshan.

Currently, stainless steel prices are at relatively low levels, and stainless steel mills have also fallen into a situation of cost-price inversion, posing significant resistance to further price declines. However, due to the continuous weakness in downstream end-use demand, market participants generally maintain a cautious wait-and-see attitude, leading to continued sluggish market transactions. Before the Labour Day holiday, significant changes in the market are unlikely to occur, and stainless steel prices are expected to maintain a weak trend in the short term.

Nickel Ore:

Last week, FOB prices for Philippine nickel ore increased, while CIF prices remained stable with a slight increase. From a supply and demand perspective, the rainy season in southern Philippines has largely 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 an inventory perspective, domestic nickel iron mills' inventories remain at relatively low levels, and there is still a need for just-in-time procurement, but the acceptance of nickel ore prices is limited. In terms of costs, the transaction prices for 1.3% nickel ore from the Philippines during the week were mostly above FOB $35/wmt, leading to a further increase in nickel ore import costs. Overall, there is a contradiction between the high-price offers from the Philippines and the decreased acceptance of high-priced nickel ore by domestic NPI enterprises, placing NPI plants in a dilemma when procuring raw materials. Ocean freight rates remained stable with a slight increase during the week, with rates from the Surigao region to Lianyungang, China, at approximately $10.5~11/wmt. Regarding exports from the Philippines to Indonesia, the volume continues to increase, and Indonesian nickel ore prices have generally held up well during the month, providing some support to Philippine nickel ore prices. Overall, SMM expects that Philippine nickel ore prices may continue to hold up well in the subsequent period.

Last week, Indonesian ore prices remained generally stable. For pyrometallurgical ore, upstream and downstream parties are negotiating premiums for May, with transaction prices temporarily holding steady last week. Last week's transaction prices in the Indonesian market: For pyrometallurgical ore, the mainstream premium in Sulawesi continued at $24~26, with SMM's Indonesia's local ore 1.6% delivery-to-factory price at $51.5~53.5/wmt. For ore used for hydrometallurgy, prices showed a slight easing, with SMM's Indonesia's local ore 1.2% delivery-to-factory price at $23.5~24.5/wmt.

Pyrometallurgical Ore: Supply Side: The rainy season in the Sulawesi region has lasted longer, with frequent precipitation during the week, resulting in a slow recovery in the supply of Sulawesi nickel ore. On the demand side, downstream NPI enterprises still have a need for just-in-time procurement, coupled with the fact that raw material stocking by smelters in Q1 was not smooth, and the situation of tight nickel ore supply continues. In terms of policies, the nickel royalties under the PNBP policy have been increased and officially implemented on April 26, leading to a certain increase in the sales costs of nickel ore. Overall, pyrometallurgical ore prices may remain generally stable with a slight upward trend.

Ore Used for Hydrometallurgy: Supply Side: The situation of tight supply of ore used for hydrometallurgy was not evident during the week. On the demand side, the accident at the HPAL smelting project in the Sulawesi Industrial Park affected the demand for ore used for hydrometallurgy by HPAL smelters in April. Overall, subsequent prices for ore used for hydrometallurgy may show a weak trend, possibly experiencing a slight decline.