SHFE nickel futures opened slightly higher during the night session, then fluctuated downward. Today, the day session continued to pull back, turning negative in the afternoon. The most-traded contract closed down 0.64% at 123,600 yuan/mt, maintaining a sideways movement pattern overall. The supply of nickel ore remained tight, providing strong cost support. Recently, trade tensions have eased, macro sentiment has improved, and end-use demand has shown some signs of recovery, but downstream buyers' willingness to actively restock remains weak.
The nickel ore market remained quiet, with ore prices remaining firm. Resources from Surigao, Philippines, are expected to be concentrated for sale starting next week. With downstream iron plants' profits under pressure, they maintained a mindset of driving down prices for nickel ore raw materials. In Indonesia, both large-K and small-K areas are experiencing rainy weather, and the shortage of nickel ore supply persists. The domestic trade premium for nickel ore in May (Phase II) remained unchanged at 26-27, with some plants' premiums reaching 28. The base price for domestic trade in May (Phase II) rose by 0.65-1 US dollar, with overall prices rising slightly. Recently, inquiries in the nickel pig iron (NPI) market have slightly improved, with transactions varying in price. NPI prices are in the doldrums. Indonesian iron plants have suspended quoting prices amid widespread losses, and the recent inflow of Indonesian NPI has also decreased.
In April, the production of MHP in Indonesia was significantly affected by floods, leading to a supply-demand gap. MHP supply remained tight, with the transaction coefficient now at 84-85% discount. The transaction coefficient for high-grade nickel matte has also been influenced, with cost support being more evident. Sentiment to stand firm on quotes for nickel sulphate is high, but downstream acceptance is low. Due to high raw material costs, nickel salt smelters are expected to mainly consume inventory, with some considering production cuts to alleviate cost pressure. On the downstream demand side, as the procurement of ternary cathode precursors was completed in April, recent procurement has been sluggish, with low trading volumes in the market.
Regarding the outlook, Xinhu Futures commented that since the beginning of the year, the supply of nickel ore in Indonesia has remained tight, providing strong support for nickel prices. However, the medium-term surplus pressure on refined nickel supply is difficult to alleviate. Moreover, the rainy season in the Philippines generally ends in Q2, and nickel ore shipments are expected to rebound, with subsequent support factors for tight nickel ore supply weakening. Nickel prices should still be approached with a strategy of rebounding and selling short.
