Philippine Nickel Ore Prices Hold Steady, With Initial Signs of a Slight Decline [SMM Nickel Morning Meeting Summary]

5.19 Nickel Morning Meeting Summary

Macro News:

(1) Fed Chairman Powell: The Federal Reserve is adjusting its overall policy framework. Zero interest rates are no longer a baseline scenario, and there is a need to reconsider the language on underemployment and average inflation. It is expected that April's PCE will fall to 2.2%, a mild figure, but it may still not reflect the upcoming tariff-driven price increases. Powell stated that some of the Fed's practices are permanent, such as the focus on inflation expectations. Favorable inflation expectations enable the Fed to provide follow-up support for deployment efforts without jeopardizing inflation stability.

(2) A report released by the Japanese government on Friday showed that the country's economy contracted for the first time in a year in the first quarter. The quarter-on-quarter economic growth rate was -0.2%, compared to market expectations of a 0.1% contraction. The annualized real GDP growth rate for the first quarter was -0.7%, far below the median market forecast of -0.2%. The revised GDP growth rate for the previous quarter was 2.4%. The decline in Japan's economy was attributed to stagnant private consumption and falling exports. Private consumption, which accounts for more than half of Japan's economic output, remained flat in the first quarter, compared to market expectations of a 0.1% increase. Japanese exports fell by 0.6% in the quarter, while imports rose by 2.9%.
 

Refined Nickel:

Spot Market:

Today, the SMM 1# refined nickel price is 124,900-127,350 yuan/mt, with an average price of 126,125 yuan/mt, a decrease of 200 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan No. 1 nickel is 2,000-2,200 yuan/mt, with an average premium of 2,100 yuan/mt, unchanged from the previous trading day. The premium and discount quotation range for Russian nickel is 0-300 yuan/mt, with an average premium of 150 yuan/mt, unchanged from the previous trading day.

Futures Market:

The most-traded SHFE nickel contract (NI2506) maintained a fluctuating trend in the morning session. As of 11:30, the closing price was 124,730 yuan/mt, down approximately 0.24%.

Consensus was reached on tariff issues during the China-US economic and trade talks, easing trade tensions. Currently, nickel ore prices remain high, and supply shortages in mining areas persist, driving up costs across the nickel industry chain. However, under the supply surplus scenario, cost transmission is hindered, and nickel prices may remain in the doldrums, with a support level at 122,000 yuan/mt and a resistance level at 128,000 yuan/mt. Subsequent attention should be paid to policy adjustments in Indonesia and changes in nickel ore supply after the end of the rainy season in the Philippines.

 

Nickel Sulphate:

As of last week, the SMM battery-grade nickel sulphate index price was 27,753 yuan/mt, with quotation ranges for battery-grade nickel sulphate at 27,760-28,230 yuan/mt, and the average price slightly lower than the previous week. Demand side, influenced by destocking at downstream material plants, the procurement demand for nickel sulphate has shown a contraction trend. Additionally, downstream enterprises generally maintain a low-inventory strategy, with only a few precursor plants having minor restocking needs, resulting in weak market activity. On the supply side, nickel salt producers face a dual challenge of shipping pressure and cost support. Some nickel salt plants, under inventory pressure, have lowered their quotations this week to facilitate transactions. Currently, the production cost of nickel sulphate still provides rigid support for prices, limiting the downside room. Looking ahead, considering that there are no clear signs of a significant improvement in downstream procurement rhythms, it is expected that nickel sulphate prices will continue to decline slightly in the short term.

 

 

NPI:

The average price of SMM 8-12% high-grade NPI was 941.9 yuan/mtu (ex-factory, tax included) last week, down 8.2 yuan/mtu from the previous week's average. This week, high-grade NPI prices remain under pressure. On the supply side, domestically, with an increase in port arrivals of nickel ore from the Philippines and the end of maintenance at some smelters, production is expected to rise slightly. In Indonesia, the current stable operation of domestic trade premiums for nickel ore is exerting cost pressure on smelters. With the continuous decline in finished product prices, the production drive of smelters has weakened. It is understood that some production lines have reduced their loads, and a downward expectation in Indonesian NPI production is anticipated. On the demand side, the easing of China-US tariff conflicts during the week has led to a recovery in the stainless steel futures market, followed by an increase in spot market transactions. However, the actual transaction price increase has been limited. Policy transmission still requires time to materialize. Major stainless steel plants have sufficiently stocked up on raw materials in the early stage, and the market center of gravity for high-grade NPI continues to decline. In the short term, high-grade NPI prices are expected to remain weak.

Stainless Steel:

The stainless steel spot market strengthened overall last week, with significant price increases. Early in the week, the positive news of consensus reached in China-US tariff negotiations quickly boosted market confidence, leading to a sharp increase in stainless steel futures prices, followed by a rise in the spot market. Driven by the market psychology of "rushing to buy amid continuous price rise and holding back amid price downturn," previously suppressed pessimistic sentiments quickly dissipated, market activity significantly increased, and transactions clearly improved, driving a decline in stainless steel social inventory. However, as time passed, by Friday this week, the effect of macroeconomic positives gradually weakened. After the phased procurement needs of downstream terminals were met, market transactions weakened again, and stainless steel prices also experienced a slight correction. Specifically, the cold-rolled 201/2B coils in Wuxi and Foshan were both quoted at 8,050 yuan/mt; the cold-rolled cut edge 304/2B coils had an average price of 13,275 yuan/mt in Wuxi and 13,225 yuan/mt in Foshan; the cold-rolled 316L/2B coils were priced at 23,870 yuan/mt in Wuxi and 23,875 yuan/mt in Foshan; and the hot-rolled 316L/NO.1 coils were quoted at 23,100 yuan/mt in both locations. Despite the positive impact of macroeconomic policies this week, which drove increased transactions and price increases in the stainless steel market, the fundamental aspects of the industry have not undergone a substantive reversal. On the supply side, stainless steel enterprises continue to maintain high production levels, and market supply remains loose. On the cost side, the continuous decline in prices of high-grade NPI and high-carbon ferrochrome has weakened cost support. On the demand side, as the traditional peak consumption season draws to a close, the phased demand from downstream sectors, after being concentratedly released, lacks subsequent growth momentum, and demand sustainability faces challenges. Coupled with the gradual fading of macroeconomic positives, multiple factors constrain the upward support for stainless steel prices, and the upward momentum in the short term is insufficient. The supply is evidently insufficient.

Nickel Ore:

Last week, nickel ore prices in the Philippines remained stable with slight declines. The CIF price of Philippine laterite nickel ore (NI1.3%) delivered to China was $43.5-45/wmt, unchanged WoW, and the FOB price was $32-35/wmt, also unchanged WoW. The CIF price of NI1.5% was $58-59/wmt, down by $1/wmt, while the FOB price of NI1.5% was $47-50/wmt, unchanged WoW. In terms of supply and demand, on the supply side, although there was precipitation at major nickel ore loading points in the Philippines, with heavier rainfall in areas such as Sta Cruz, Eastern Davao, and Tawi Tawi, the rainfall in Surigao decreased compared to previous weeks. Overall, despite the reduced rainfall in Surigao, the supply of nickel ore from the Philippines is still expected to increase. On the demand side, with the continuous decline in downstream NPI prices and the deepening of losses, the sentiment of domestic NPI smelters regarding raw material procurement has been dampened, and the support for nickel ore prices from the demand side continues to weaken. Regarding shipments from the Philippines to Indonesia, as of mid-May, the volume of nickel ore shipped from the Philippines to Indonesia exceeded 3 million wmt, up by over 200% YoY. The increase in Indonesia's imports of nickel ore from the Philippines has further strengthened the sentiment of Philippine mines to refuse to budge on prices. Looking ahead, the domestic transaction prices of nickel ore in the Philippines may be dragged down by the downstream sector and operate under pressure, but the impact of Indonesia on Philippine ore prices is significant.

In Indonesia, the transaction prices of nickel ore increased slightly this week, mainly due to a slight increase in HPM in the second half of May. For pyro ore, the mainstream premium for Indonesia's local ore in May remained at $26-28/wmt, unchanged WoW. The delivery-to-factory price of SMM Indonesia's local ore (1.6%) was $53.3-57.3/wmt, up by $0.7/wmt or 1.28% WoW. For hydro ore, the transaction price remained unchanged during the week, with the delivery-to-factory price of SMM Indonesia's local ore (1.3%) at $23-25/wmt. For pyro ore: On the supply side, weather disturbances to nickel ore supply persist. Frequent rainfall continues in Sulawesi, and Halmahera also entered the rainy season in May, affecting the shipments from mines. On the demand side, NPI prices have stopped falling at low levels, and there is a strong wait-and-see sentiment. Based on current ore prices, both domestic and Indonesian NPI smelters are experiencing losses, limiting their acceptance of high-priced nickel ore. In terms of inventory: After experiencing low inventory levels and ore-buying stockpiling in April, the inventory levels of Indonesian pyrometallurgical enterprises have improved, and their willingness to buy ore at above-market prices has decreased. In summary, despite supply-side disturbances such as weather conditions and potential delays in RKAB approvals, dragged down by weak downstream prices, there is limited room for a significant increase in the prices of Indonesia's local pyro ore in the short term.