[SMM Weekly Review of Nickel Ore Market] Indonesian ore prices held steady this week, with the market awaiting the next round of price quotes and transactions

Philippine nickel ore prices face limited downside in the short term due to precipitation and multiple factors in Indonesia

This week, Philippine nickel ore prices remained stable. The CIF prices of Philippine laterite nickel ore (NI1.3%) shipped to China were in the range of $43.5-45/wmt, and the FOB prices were in the range of $32-35/wmt, unchanged WoW. The CIF prices of NI1.5% ore were in the range of $58-59/wmt, and the FOB prices were in the range of $47-50/wmt, also unchanged WoW. In terms of supply and demand, on the supply side, although precipitation occurred at major nickel ore loading points in the Philippines, the continuous rainfall during the week significantly impacted the loading progress at nickel mines, leading to widespread delays compared to expectations. On the demand side, while downstream NPI prices have stabilized after halting their decline, domestic NPI smelters are still experiencing severe losses, dampening sentiment for raw material procurement. Support for nickel ore prices from the demand side continues to weaken. On the cost side, transaction prices for some Philippine nickel mines with an NI grade of 1.3% were finalized this week. Due to active procurement by traders, the final CIF prices did not decline. As a result, the immediate profits of downstream NPI plants remain difficult to recover, and raw material procurement has reached an impasse. It is not ruled out that plants may intend to cut production in the future. 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 over 200% YoY from the same period last year. The increase in Indonesia's imports of Philippine nickel ore has further strengthened the sentiment of Philippine mines to refuse to budge on prices. Looking ahead, with significant price negotiations between upstream and downstream players, coupled with price disruptions from the Indonesian side, Philippine nickel ore prices are unlikely to see significant downward adjustments in the short term.

Indonesian ore prices remain stable this week, with the market awaiting the next round of quoted prices and transactions

Transaction prices for Indonesian ore remained stable this week. For saprolite ore, the mainstream premium for Indonesia's local ore in May remained at $26-28/wmt, unchanged WoW. The delivery-to-factory price for SMM's Indonesia's local ore (1.6%) was $53.3-57.3/wmt. For limonite ore, the delivery-to-factory price for MM's Indonesia's local ore (1.3%) was $23-25/wmt.

Saprolite ore: On the supply side, weather-related disruptions to nickel ore supply persist. Frequent precipitation from midday to nighttime continues in Sulawesi, and Halmahera Island also entered the rainy season in May. Frequent rainfall has affected the shippable volume of mines. On the demand side, NPI prices have stabilized after halting their decline at low levels, with 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. On the inventory side, after experiencing low inventory levels and ore-stockpiling in April, the inventory levels of Indonesian pyrometallurgical smelters have slightly improved, reducing their willingness to compete for ore at prices above the market rate. Additionally, the approval process for the subsequent supplementary quotas of RKAB is expected to commence in June. However, the market remains concerned about the speed of approval for these quotas. Overall, despite supply-side disruptions such as weather-related factors and the possibility that the approval progress of RKAB may fall short of expectations, the current Indonesian domestic trade saprolite ore prices have limited room for short-term price increases due to the drag of weak downstream prices.

Regarding limonite ore, some projects in the MOROWALI Industrial Park experienced a reduction in MHP production in April due to the impact of a tailings dam collapse. After downstream smelters pushed down limonite ore prices, by May, most of the relevant projects in MOROWALI had resumed production. Market demand for limonite ore has rebounded. Looking ahead, there are expectations for new HPAL projects to commence production in the second half of the year, and the subsequent supply and demand for limonite ore may start to tighten. SMM forecasts that limonite ore prices may hold up well in the future.

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