[SMM MHP Daily Review] May 21, Indonesian MHP prices slightly declined

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As of now, the MHP coefficient (relative to the SMM battery-grade nickel sulphate index) stands at 83.5%-84%, with the FOB price of Indonesian MHP at $12,778/mt Ni.

Demand side, this month, MHP prices have been fluctuating at highs due to weakened supply. Nickel salt smelters, concerned about costs, have shown weaker sentiment in MHP procurement this month, with some smelters cutting production or increasing the proportion of recycled materials as raw materials. Additionally, downstream demand for nickel salts has weakened in May due to destocking by material manufacturers. Consequently, MHP procurement sentiment has been relatively subdued in May. Supply side, Indonesian MHP projects have gradually resumed in May, but MHP port arrivals are still affected by April's production cuts. Therefore, MHP supply remains tight in May, with no downward trend in the MHP coefficient. Cost side, the latest PNBP royalty policy implemented in Indonesia will directly increase the sales cost of nickel ore. Market feedback indicates that the policy-induced rise in limonite ore procurement prices was already evident in early April. Moreover, the royalty imposed on limonite 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. Thus, the PNBP policy is expected to have a relatively limited impact on MHP production costs in the short term.

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