LME nickel prices experience slight correction, with some nickel salt smelters showing signs of loosening their quotes [SMM Nickel Morning Meeting Summary]

6.4 Morning Meeting Summary

Macro News:

(1) Tariffs: ① European and US trade officials will meet on Wednesday, with the EU reiterating warnings of tariff retaliation. ② Foreign media: Seeking to accelerate negotiations, Trump demands countries submit their "best offers" by Wednesday. ③ The Trump administration appeals the order from the US District Court for the District of Columbia ruling its tariff policy "unlawful". ④ Japanese Prime Minister: No intention to make concessions on US tariff issues.

(2) On May 31, the China Federation of Logistics and Purchasing (CFLP) and the Service Industry Survey Center of the National Bureau of Statistics (NBS) announced China's PMI for May. The manufacturing PMI for May was 49.5%, up 0.5 percentage points MoM.

Refined Nickel:

Spot Market:

Today, the SMM 1# refined nickel price is 121,400-124,300 yuan/mt, with an average price of 122,850 yuan/mt, up 525 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan #1 refined nickel is 2,500-2,600 yuan/mt, with an average premium of 2,550 yuan/mt, down 50 yuan/mt from the previous trading day. The premiums and discounts quotation range for Russian refined nickel is 100-500 yuan/mt, with an average premium of 300 yuan/mt, up 50 yuan/mt from the previous trading day.

Futures Market:

The most-traded SHFE nickel contract (NI2507) opened higher this morning, regaining the 122,000 yuan/mt level during the session, mainly exhibiting a fluctuating trend. As of 11:30, the closing price was 121,380 yuan/mt, up 0.25%.

In the medium and long term, the global nickel overcapacity remains unresolved, with the nickel market under triple pressures of "high supply, weak demand, and tight funding". In the short term, the bottom of the fluctuation range is seen at 118,000 yuan/mt, while the top is capped at 123,000 yuan/mt.

Nickel Sulphate:

On June 3, the SMM battery-grade nickel sulphate index price was 27,702 yuan/mt, with the quotation range for battery-grade nickel sulphate at 27,700-28,130 yuan/mt, and the average price holding steady WoW.

On the cost side, LME nickel prices saw a slight correction today, strengthening immediate cost support. Demand side, despite signs of a MoM improvement in nickel salt demand in June, overall demand remains sluggish. Affected by partial raw material inventory and weak order demand, during this week's traditional procurement period, precursor enterprises showed low inquiry and transaction activity for nickel salts. Supply side, nickel salt smelters' order signing for June has been poor this week, with some large nickel salt enterprises planning to conduct production shutdowns for maintenance in June. Given weak demand coupled with falling costs, some nickel salt smelters' quotations have shown signs of loosening.

Looking ahead, considering the continued mediocre downstream demand and the weakened bargaining power of some buyers, nickel salt prices are expected to weaken further in the short term.

Nickel Pig Iron (NPI):

On June 3, the average price of SMM 8-12% high-grade NPI was 955 yuan/mtu (ex-factory, tax included), up 1 yuan/mtu from the previous working day. Supply side, domestically, nickel ore prices in the Philippines remain relatively firm, imposing a significant cost burden on smelters. Driven by the resumption of production at a smelter in North China after maintenance, production has seen a slight increase. In Indonesia, the current domestic trade premiums for saprolite ore remain relatively firm, with a minimal decline in HPM. Smelters enjoy strong cost support from nickel ore, and the struggle to raise finished product prices has led to a loss-making situation for mainstream smelters. However, due to the weak incentive to produce high-grade nickel matte, the overall decline in production is expected to be limited. Demand side, stainless steel has entered the seasonal active destocking phase. During the Dragon Boat Festival holiday, mainstream stainless steel mills lowered their guidance prices for cold-rolled and hot-rolled products, putting pressure on raw material prices. Meanwhile, due to the limited availability of low-priced goods in the market and the firm cost support for high-grade NPI, the price center for procurement by some steel mills for just-in-time inventory has shifted upwards. Overall, high-grade NPI prices are expected to operate under pressure in the short term.

Stainless Steel:

On June 3, the SS futures market continued its weak trend, with prices briefly falling below the 12,600 yuan/mt threshold during the session. During the Dragon Boat Festival holiday, news emerged that an agent of a steel mill in South China lowered the prices of 304 cold-rolled and hot-rolled stainless steel, with the price of 304 hot-rolled steel quickly following suit. Despite the 304 cold-rolled price remaining higher than the previous mainstream transaction prices in the market after the adjustment, with market quotes temporarily stable, this news severely dampened market confidence. Consequently, on the first trading day after the Dragon Boat Festival holiday, market transactions continued to be sluggish, with overall performance remaining weak.

In the futures market, the most-traded 2507 contract was in the doldrums. At 10:30 a.m., SS2507 was quoted at 12,700 yuan/mt, down 10 yuan/mt from the previous trading day. Spot premiums/discounts for 304/2B stainless steel in the Wuxi area ranged from 470-670 yuan/mt. In the spot market, cold-rolled 201/2B coils in Wuxi and Foshan were both quoted at 7,950 yuan/mt; cold-rolled uncut edge 304/2B coils had an average price of 13,100 yuan/mt in Wuxi and 13,100 yuan/mt in Foshan; cold-rolled 316L/2B coils were priced at 24,050 yuan/mt in Wuxi and 24,050 yuan/mt in Foshan; hot-rolled 316L/NO.1 coils were quoted at 23,350 yuan/mt in both Wuxi and Foshan; and cold-rolled 430/2B coils were priced at 7,500 yuan/mt in both Wuxi and Foshan.

Currently, the stainless steel market has fully entered the traditional consumption off-season, with downstream demand remaining sluggish. Although stainless steel production has declined since March, it remains at historically high levels, leading to a significant surplus in market supply and persistently high social inventory. At this stage, market transactions are mainly concentrated on low-priced warrant cargoes, while non-standard high-priced cargoes are primarily procured on a just-in-time basis, resulting in low overall trading activity. Although stainless steel enterprises are generally facing losses and several steel mills have announced production cuts, these measures have yet to effectively boost the spot market amid dual pressures from weakening market demand and high inventory. From the raw material side, influenced by expectations for production cuts at stainless steel mills, the price of high-grade NPI struggles to rise, while the price of high-carbon ferrochrome has already shown a pullback, continuously weakening the cost support for stainless steel. If the subsequent production cuts are less severe than expected, against the backdrop of the off-season for consumption, stainless steel prices may continue to remain in the doldrums in the short term.

Nickel Ore:

Philippine nickel ore prices remain firm due to rainfall and multiple factors from the Indonesian side

Philippine nickel ore prices held steady this week. 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 $34-36/wmt, showing an increase WoW. The CIF prices of NI1.5% were in the range of $58-59/wmt, and the FOB prices were in the range of $47-50/wmt, remaining unchanged WoW. In terms of supply and demand, on the supply side, although major nickel ore loading points in the Philippines experienced rainfall, the continuous rainy weather during the week significantly impacted the loading progress at nickel mines, causing widespread delays compared to expectations. On the demand side, although downstream NPI prices have stabilized after halting their decline, domestic NPI smelters are still facing severe losses, dampening sentiment for raw material procurement and continuously weakening demand-side support for nickel ore prices. Regarding shipments from the Philippines to Indonesia, as of mid-May, the volume of nickel ore shipped from the Philippines to Indonesia exceeded 4 million wmt. The increase in Indonesia's imports of Philippine nickel ore has further fueled the reluctance of Philippine mines to budge on prices. Looking ahead, with significant price negotiations between upstream and downstream players, coupled with price disturbances from the Indonesian side, there may be limited room for a substantial decrease in Philippine nickel ore prices in the short term.

Indonesian ore premiums remain steady in June; Indonesian high-grade NPI enterprises continue to face losses

Prices of Indonesia's local ore held steady this week. In terms of premiums, the mainstream premiums for Indonesia's local laterite nickel ore remained in the range of $26-28/wmt this week. Regarding benchmark prices, the HMA price for the first half of June held steady with a slight decline, at $15,405/mt, down 0.06% MoM from the previous period. Overall, the prices of saprolite ore remained stable this week. The delivery-to-factory price of SMM Indonesia's local laterite nickel ore (1.6%) was in the range of $53.3-57.3/wmt, unchanged from the previous week. In terms of limonite ore prices, the delivery-to-factory price of SMM Indonesia's local laterite nickel ore (1.3%) held steady at $23-25/wmt, the same as the previous week.

In terms of saprolite ore, from the supply side, Sulawesi and Halmahera, as major nickel ore mining regions, continued to experience supply disruptions during the week due to frequent rainfall, which hindered mining and transportation processes at some mines. In addition, the slow progress of RKAB approvals continued to affect supply. It is understood that the subsequent supplementary quota approval process for RKAB is expected to commence in June and July of H2, but the market remains concerned about the speed of approval for these supplementary quotas. Recently, rumors have circulated in the market that a large number of RKAB quotas were approved in the past few weeks. However, after verification with the Indonesian Ministry of Energy and Mineral Resources (ESDM), these rumors may not be true, and the tight supply of nickel ore has not yet been alleviated. From the demand side, despite the slow rebound in NPI prices this week, Indonesian NPI smelters are still experiencing losses as of now, and their ability to accept further increases in nickel ore prices is limited. Overall, although Indonesia is still facing supply disruptions due to the rainy season and the slow progress of RKAB quota approvals, dragged down by weak downstream demand, the upside room for Indonesia's local saprolite ore prices in the short term may be limited, and saprolite ore prices are expected to remain stable in June.

In terms of limonite ore, from the supply side, there have been no significant changes in the recent supply of limonite ore. According to SMM, a major mine in Indonesia has applied for supplementary limonite ore quotas, but these have not yet been approved. From the demand side, most of the HPAL projects in the MOROWALI Industrial Park that were affected by floods in May have resumed production, and market demand for limonite ore has rebounded somewhat. Additionally, there are expectations for the commissioning of two HPAL smelting projects with relatively large capacities in H2, which may lead to a significant increase in subsequent demand for limonite ore. Looking ahead, SMM expects that limonite ore prices may hold up well.