[SMM MHP Daily Review] May 9: MHP Prices in Indonesia Decline Slightly

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Recently, influenced by a slight decline in LME nickel prices. As of now, the MHP coefficient (relative to the SMM battery-grade nickel sulphate index) stands at 84%-85%, with the FOB price of Indonesian MHP at $12,725/mt (Ni contained).

Demand side, this month, MHP prices fluctuated at highs due to weakened supply. Nickel salt smelters, concerned about costs, showed weaker sentiment in MHP procurement, with some reducing production or increasing the proportion of recycled materials as raw materials. Supply side, affected by April's flood disaster, Indonesian MHP production was limited, and port arrivals in May are expected to be significantly impacted. Cost side, Indonesia's latest PNBP royalty policy, tentatively set to take effect on the 26th, will directly increase the sales cost of nickel ore. Market feedback indicates that the policy-induced price increase for hydrometallurgical nickel ore procurement was already reflected in early April. Moreover, the royalty on hydrometallurgical ore itself is relatively low; for a 1.3-grade nickel ore, it requires 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 transmission effect on MHP production costs in the short term.

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