High-Nickel Pig Iron and Pure Nickel Markets Face Continued Downward Pressure Amid Supply-Demand Imbalances

This week, the average price of SMM 8-12% high-nickel pig iron (NPI) stood at 967.5 yuan per nickel unit (including tax, ex-factory), marking a decrease of 7.2 yuan per nickel unit compared to last week's average. Although the price of high-nickel pig iron continues to trend downward, the rate of decline has slowed compared to the previous week.

On the supply side, domestically, the shipment volume of nickel ore from the Philippines has increased significantly from earlier periods, replenishing the nickel ore inventory of smelters. However, due to the decline in finished product prices leading to inverted costs, smelters' production levels remain low. In Indonesia, nickel ore premiums have remained stable with slight increases, and the cost line for smelters shows potential upward movement. At the same time, weak finished product prices suggest a slight decrease in production expectations.

On the demand side, the stainless steel market remained insufficiently active before the May Day holiday. Some demand had already been advanced, and the impact of the staged decline in raw material prices resulted in sluggish stainless steel transaction volumes this week. Leading stainless steel manufacturers remain cautious about the future market, expecting the negative feedback in the stainless steel market to continue under the influence of tariffs, thereby putting short-term pressure on high-nickel pig iron prices.

Additionally, this week, the average discount between high-nickel pig iron and electrolytic nickel was 274.92 yuan per nickel unit, a decrease of 8.38 yuan per nickel unit compared to last week's discount. Although prices still show a weak performance, there are signs of partial stabilization.

In the pure nickel market, the impact of U.S. tariffs continues to resonate. U.S. macroeconomic indicators fall short of expectations, and the Federal Reserve's remarks have started to soften. If the nonfarm payroll data weakens again, the Fed may consider another rate cut. As a result, base metals showed a weak and volatile performance this week. The supply and demand balance for pure nickel remains in surplus, and with downstream demand expected to weaken, nickel plate transaction volumes are also weak, suggesting continued short-term price pressure.

In the short term, the supply and demand imbalance for high-nickel pig iron may intensify, with expectations for further price declines. However, due to firm cost support, the downside potential remains limited. For pure nickel, short-term intermediate product supply shortages may support prices, but under a generally weak fundamental backdrop, nickel prices are likely to remain under pressure. For next week, it is anticipated that the average discount of high-nickel pig iron compared to electrolytic nickel may expand.

From the cost perspective, based on nickel ore prices from 25 days ago, the cash cost for high-nickel pig iron smelters remains upside-down this week. Observing the raw material side, auxiliary material prices remained stable this week. The recent rise in downstream demand has increased pig iron production, thereby supporting the prices of coking coal and thermal coal. Consequently, the auxiliary material costs for smelters have held steady this week.

On the mining side, after the end of the rainy season in the Philippines, nickel ore shipment volumes began to increase compared to earlier periods. Despite strong demand for Indonesian nickel ore and low domestic smelter inventories, nickel ore prices have remained stable with a slight upward trend. The current price inversion is mainly due to the weak price levels of high-nickel pig iron. Next week, auxiliary material prices are likely to remain stable under the support of downstream demand, and nickel ore prices may also maintain a stable-to-strong trend in the short term. The losses for high-nickel pig iron smelters may further expand.

In summary, both the high-nickel pig iron and pure nickel markets are facing multiple pressures from both the supply and demand sides this week, with price trends leaning towards decline. However, the downside potential is limited by cost support. Next week's trends will need to be observed in the context of market supply and demand changes.