[SMM MHP Daily Review] On May 23, 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 $12,756/mt Ni.

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. Additionally, downstream demand for nickel salts weakened in May due to destocking by material manufacturers. Consequently, MHP procurement sentiment remained subdued in May. Supply side, Indonesian MHP projects gradually resumed in May, but port arrivals of MHP 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 newly implemented PNBP royalty policy will directly increase the sales cost of nickel ore. Market feedback indicates that the policy-induced price increase for limonite ore procurement was evident in early April. Moreover, the royalty on limonite ore itself is relatively low, with an additional $0.75/wmt required for 1.3-grade nickel ore 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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