[SMM MHP Daily Review] May 12, MHP prices in Indonesia rise

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Today, driven by the easing of US-China trade tensions, non-ferrous metals generally rose, with LME nickel prices slightly increasing. 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 $12,753/mt (Ni contained).

Demand side, this month, due to weakened supply, MHP prices fluctuated at highs. Nickel salt smelters, concerned about costs, showed weaker sentiment for MHP procurement this month, with some smelters cutting production or increasing the proportion of recycled materials used as raw materials. Additionally, downstream demand in May showed no significant increase, leading to a production schedule for the overall nickel sulphate market that was basically flat compared to April. Therefore, MHP procurement sentiment eased in May. Supply side, Indonesian MHP projects gradually resumed in May, but MHP port arrivals were still affected by April's production cuts. Thus, MHP supply remained tight in May, with no downward trend in the MHP coefficient. 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, with 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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