High-Grade NPI Prices Have Risen Slightly, Facing Dual Pressures From Raw Materials And Demand

This week, the average price of SMM8-12% high-nickel pig iron was 953.3 yuan per nickel point (including tax, ex-factory), marking an increase of 6 yuan per nickel point compared to last week. Overall, the price of high-nickel pig iron has shown a slight upward trend this week.

From the supply side, in the domestic market, the price of nickel ore from the Philippines remains firm, and the loss situation in smelters has not changed. Some smelters have reduced their production, but despite the resumption of operations in smelters in East and South China, the overall output remains low. In the Indonesian market, the price of fire method nickel ore in domestic trade remains firm, and smelters are generally facing cost inversion situations. As a result, some high-cost smelters have reduced their production load, leading to a slight decrease in overall output.

On the demand side, due to the lack of significant pre-Dragon Boat Festival restocking in the stainless steel market this week, there has been an accumulation of stainless steel social inventory. Major steel mills have shown relatively weak demand for raw material procurement, while traders have made some transactions, mostly at average prices. In the short term, even though the mitigation of the Trump administration's tax policies has not stimulated terminal demand, the price of stainless steel has become weak, putting pressure on the raw material side. However, given strong cost support, the price of high-nickel pig iron is expected to remain stable.

Additionally, from the perspective of the price difference between high-nickel pig iron and electrolytic nickel, this week high-nickel pig iron had an average discount of 265.5 yuan per nickel point compared to electrolytic nickel, narrowing by 23.25 yuan per nickel point from last week. The narrowing of the price difference is mainly due to the fluctuation and decline in nickel prices, with high-nickel pig iron prices continuing to rise slightly.

Regarding the pure nickel market, from a macro perspective, the recent announcement by the Trump administration of a 50% tariff on goods from the European Union starting June 1 has increased the uncertainty of tariff policies, causing fluctuations and weakness in the market for non-ferrous metals. Fundamentally, the global supply of primary nickel remains in surplus, and downstream consumption has been hit by both tariff impacts and seasonal downturns. This may expand the surplus of pure nickel, thereby suppressing nickel prices. The fluctuation and decline in nickel prices have also led to a narrowing of the discount between high-nickel pig iron and electrolytic nickel.

In summary, the weak stainless steel prices have had a transmission effect, making it difficult for high-nickel pig iron prices to rise. In the pure nickel market, macroeconomic uncertainty continues to cause fluctuations in the non-ferrous metals market, and with the cost of hydrometallurgy declining, the cost center of nickel prices may further decline, and pure nickel prices are expected to continue fluctuating weakly.

From a cost perspective, based on the cash cost of high-nickel pig iron calculated from the nickel ore price 25 days ago, the cost inversion situation continues for high-nickel pig iron smelters this week. As for auxiliary material prices, coke and coking coal inventory in steel mills are high, and the output of molten iron in steel mills has begun to weaken, putting pressure on coke prices. Additionally, the futures market for coke and coking coal continues to weaken, loosening the cost line for auxiliary materials in smelters. From the mine end, the price of nickel ore from the Philippines remains strong due to robust demand from Indonesia.

Overall, it is predicted that auxiliary material prices will continue to be weak next week, and the auxiliary material cost line for smelters may decline further. Meanwhile, due to an increase in downstream demand in the short term, nickel ore prices are expected to remain firm. It is anticipated that the extent of smelters' losses will further narrow next week.