[SMM MHP Daily Review] May 7: MHP prices in Indonesia rose slightly

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Recently, influenced by the rebound in futures prices and the MHP coefficient fluctuating at highs. As of now, the MHP coefficient (relative to the SMM battery-grade nickel sulphate index) is 84%-85%, and the FOB price of Indonesian MHP is $12,737/mt (Ni contained).

Demand side, this month, MHP prices have been fluctuating at highs due to weakened supply. Nickel salt smelters, concerned about costs, showed weaker sentiment in MHP procurement this month, with some smelters cutting production or increasing the proportion of recycled materials as raw materials. Supply side, affected by the flood disaster in April, Indonesian MHP production has been limited, and port arrivals in May are expected to be significantly impacted. Cost side, the latest PNBP royalty policy implemented in Indonesia is tentatively scheduled to take effect on the 26th, which will directly increase the sales cost of nickel ore. Market feedback indicates that the price increase in hydrometallurgical nickel ore procurement caused by this policy was already reflected in early April. Moreover, the royalty imposed on hydrometallurgical ore itself is relatively low, calculated based on a 1.3 grade nickel ore, requiring an additional payment of about $0.75/wmt compared to before the PNBP amendment. Therefore, the PNBP policy is expected to have a relatively limited impact on MHP production costs in the short term.

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