Downstream demand for nickel sulphate remains mediocre, and nickel salt prices may weaken further in the short term [SMM Nickel Morning Meeting Summary]

6.5 Morning Meeting Summary

Macro News:

(1) Tariffs - ① The Trump administration raised tariffs on steel and aluminum to 50%, effective from the 4th; ② Sources: The US presented Vietnam with a "long and stringent" list of demands in tariff negotiations; ③ Sources: The EU has not received a letter from the US requesting "best trade offers"; ④ Brazilian President: If no agreement on tariffs is reached with the US, Brazil will resort to the WTO or take reciprocal measures; ⑤ India-EU FTA negotiations accelerate, with consensus reached on nearly half of the issues.

(2) The Ministry of Commerce and four other departments organized the 2025 New Energy Vehicle (NEV) Rural Promotion Campaign. Market entities in various fields, including NEV production, sales, finance, battery swapping, charging, and after-sales services, are encouraged to participate. By integrating policy tools such as trade-in programs and the improvement of charging and battery swapping infrastructure in counties, a comprehensive sales promotion plan of "car purchase discounts + energy use support + service guarantees" will be customized, and an after-sales service network covering the entire lifecycle of car purchase, use, and maintenance will be improved.

Refined Nickel:

Spot Market:

Today, the SMM 1# refined nickel price is 122,100-124,750 yuan/mt, with an average price of 123,425 yuan/mt, up 575 yuan/mt from the previous trading day. The quotation range for spot premiums of Jinchuan #1 refined nickel is 2,400-2,600 yuan/mt, with an average premium of 2,500 yuan/mt, down 50 yuan/mt from the previous trading day. The quotation range for premiums and discounts of Russian refined nickel is 100-600 yuan/mt, with an average premium of 350 yuan/mt, up 50 yuan/mt from the previous trading day.

Futures Market:

The most-traded SHFE nickel contract (NI2507) opened lower and closed higher in the night session, ending at 121,860 yuan/mt, up slightly by 0.25%. It continued to strengthen during the day session, closing at 122,700 yuan/mt by 11:30, up 0.94%.

In the medium and long term, the global nickel overcapacity issue remains unresolved, with the nickel market under triple pressure of "high supply, weak demand, and tight funding". The short-term oscillation range is expected to have a bottom at 118,000 yuan/mt and a ceiling at 123,000 yuan/mt.

Nickel Sulphate:

On June 4, the SMM battery-grade nickel sulphate index price was 27,700 yuan/mt, with a quotation range for battery-grade nickel sulphate of 27,700-28,130 yuan/mt, and the average price remained stable WoW.

On the cost side, LME nickel prices saw a slight correction today, strengthening immediate cost support. Demand side, despite signs of a MoM recovery in nickel salt demand in June, overall demand remains sluggish. Affected by partial raw material inventory and weak order demand, precursor enterprises showed low inquiry and transaction activity for nickel salt during this week's traditional procurement period. Supply side, nickel salt producers reported weak order bookings for June this week, with some major nickel salt companies planning to conduct maintenance shutdowns in June. Given sluggish demand coupled with declining costs, some nickel salt producers showed signs of softening their offers.

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

NPI:

On June 4, the SMM average price for 8-12% high-grade NPI stood at 956 yuan/mtu (ex-factory, tax included), up 1 yuan/mtu from the previous trading day. Supply side, domestically, Philippine ore prices remained firm, imposing significant cost pressure on smelters. Production saw a slight increase as a smelter in North China resumed operations after maintenance. In Indonesia, domestic trade premiums for saprolite ore stayed resilient, with minimal declines in HPM, keeping strong cost support for smelter ore inputs. However, finished product prices struggled to rise, leaving mainstream smelters in losses. Meanwhile, weak production incentives for high-grade nickel matte suggested limited overall output reductions. Demand side, stainless steel entered a seasonal destocking phase, and major steel mills cut guidance prices for cold and hot rolled products during the Dragon Boat Festival, putting pressure on raw material prices. Concurrently, limited availability of low-priced spot cargoes and firm cost support for high-grade NPI pushed up the price center for just-in-time procurement by some steel mills. Overall, high-grade NPI prices are likely to remain under pressure in the short term.

Stainless steel:

On June 4, SMM reported that SS futures rose in tandem with the broader ferrous metals series. However, the spot market reacted tepidly, with transactions dominated by just-in-time procurement and overall sluggish trading sentiment. Traders lacked confidence in the outlook. Despite current stainless steel prices being at low levels and further downside limited by steel mill production cuts, significantly weak downstream demand and strong market caution suggested little near-term improvement in activity.

Futures side, the most-traded contract 2507 fluctuated upward. At 10:30 am, SS2507 traded at 12,660 yuan/mt, up 10 yuan/mt from the previous session. In Wuxi, spot premiums/discounts for 304/2B ranged between 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 averaged 13,100 yuan/mt in both cities; cold-rolled 316L/2B coils in Wuxi and Foshan were priced at 24,050 yuan/mt; hot-rolled 316L/NO.1 coils traded at 23,350 yuan/mt in both regions; cold-rolled 430/2B coils in Wuxi and Foshan were uniformly priced at 7,500 yuan/mt.

Currently, the stainless steel market has fully entered the traditional consumption off-season, with downstream demand remaining sluggish. Despite a decline in stainless steel production since March, it has still maintained 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 multiple steel mills have announced production cuts, these measures have yet to effectively boost the spot market amid the dual pressures of weakening market demand and high inventory. From the raw material side, influenced by expectations of production cuts at stainless steel mills, the price of high-grade NPI struggles to rise, while the price of high-carbon ferrochrome has shown a pullback, leading to a continuous weakening of cost support for stainless steel. If subsequent production cuts fall short of expectations, against the backdrop of the consumption off-season, stainless steel prices may continue to remain in the doldrums in the short term.

Nickel Ore:

Philippine nickel ore prices remain firm amid rainfall and multiple factors from Indonesia

Philippine nickel ore prices held steady this week. The CIF price of Philippine laterite nickel ore NI1.3% from the Philippines to China was $43.5-45/wmt, and the FOB price was $34-36/wmt, showing an increase WoW. The CIF price of NI1.5% was $58-59/wmt, and the FOB price was $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, with continuous rainfall during the week significantly affecting the loading progress of nickel mines, the loading progress was generally delayed 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 leading to a continuous weakening of 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 Indonesia, there may be limited room for a substantial downward adjustment in Philippine nickel ore prices in the short term.

Indonesian ore premiums remain stable 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 premium for Indonesia's local laterite nickel ore remained at $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 price of saprolite ore remained stable this week. SMM's delivery-to-factory prices for Indonesia's local laterite nickel ore with 1.6% nickel content stood at $53.3-57.3/wmt, unchanged WoW. In terms of limonite ore prices, SMM's delivery-to-factory prices for Indonesia's local laterite nickel ore with 1.3% nickel content remained stable at $23-25/wmt, the same as last week.

For saprolite ore, in terms of supply, as Sulawesi and Halmahera are the main nickel ore mining regions, the supply situation during the week was still disrupted by frequent precipitation, hindering the 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 quotas for RKAB are expected to enter the approval process in June and July of H2, but the market remains concerned about the approval speed of these 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 Ministry of Energy and Mineral Resources (ESDM) of Indonesia, these rumors may not be true, and the tight supply of nickel ore has not yet been alleviated. On the demand side, although NPI prices in Indonesia have shown a slow rebound this week, as of now, Indonesian NPI smelters are still experiencing losses, with limited ability to accept further increases in nickel ore prices. Overall, despite supply disruptions in Indonesia due to the rainy season and the slow progress of RKAB quota approvals, the short-term upside room for Indonesia's local saprolite ore prices may be limited due to the drag from downstream demand, with saprolite ore prices expected to remain stable in June.

For limonite ore, in terms of supply, 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 has not yet received approval. On the demand side, most of the HPAL projects in the MOROWALI Industrial Park that were affected by floods in May have resumed production, leading to a rebound in market demand for limonite ore. In addition, 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.