Philippine nickel ore prices remain high; domestic enterprises may be forced to choose between high-priced procurement or production cuts
This week, Philippine nickel ore prices edged up slightly. The CIF price of Philippine laterite nickel ore (NI1.3%) shipped from the Philippines to China was $44-45/wmt, and the FOB price was $34-36/wmt. The CIF price of NI1.5% was $59-60/wmt, and the FOB price was $49-51/wmt. In terms of supply and demand, on the supply side, although there was precipitation at major nickel ore loading points in the Philippines, the continuous rainfall during the week significantly impacted the loading progress at nickel mines, with loading progress generally delayed compared to expectations. On the demand side, although 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. Regarding exports to Indonesia, as of the end of May, Philippine exports to Indonesia exceeded 4 million mt, representing a YoY increase of over 300%. Indonesia's demand for Philippine nickel ore has increased, and the high nickel ore prices in Indonesia have continued to fuel the reluctance of Philippine mines to budge on prices. Looking ahead, the current tug-of-war between upstream and downstream players over prices, coupled with price disruptions from the Indonesian side, suggests that Philippine nickel ore prices may continue to hold up well in the short term. Domestic enterprises may be forced to choose between high-priced procurement or production cuts.
Prices of both pyrometallurgy and limonite ores in Indonesia strengthen
This week, prices of Indonesia's local ore strengthened. In terms of premiums, the mainstream premium for Indonesia's local laterite nickel ore remained at $26-30/wmt this week, but some high-priced transactions were observed. Overall, prices of saprolite ore rose slightly this week. The SMM delivery-to-factory price of Indonesia's local laterite nickel ore (1.6%) was $54.3-57.3/wmt, up $0.5/wmt WoW. For limonite ore prices, the SMM delivery-to-factory price of Indonesia's local laterite nickel ore (1.3%) held steady at $25-27/wmt, up $2/wmt WoW.
On the saprolite ore side, from the supply perspective, frequent precipitation on Sulawesi and Halmahera islands continues to affect mine loading and supply. As we enter H2, the approval of supplementary RKAB quotas has begun, but this remains insufficient to alleviate the persistently tight supply. After some mines obtained quotas, new highs were recorded in tender prices, which has instead fueled sentiment for higher prices in the short term. Looking ahead, the market remains concerned about the approval speed of subsequent supplementary RKAB quotas. From the demand perspective, Indonesian NPI smelters are still in a phase of cost
losses, with limited ability to absorb nickel ore price increases. However, from an inventory perspective, smelter inventory levels remain generally low, and there is still demand for just-in-time procurement. Overall, despite being dragged down by the downstream sector, supply remains tight, and mines still hold significant bargaining power. It is common for smelters to bid competitively for ore. Looking ahead, the June premium has already been agreed upon, and saprolite ore prices are expected to remain stable in the short term. If new incentive mechanisms are introduced, there is still a possibility for factory purchase prices to rise.
In terms of limonite ore, in terms of supply, there have been no significant changes in the recent limonite ore supply. In terms of demand, some HPAL projects in the MOROWALI Industrial Park that were previously affected by floods have resumed production. Limonite ore prices in June have returned to March levels. Looking ahead, there are expectations for two HPAL smelting projects with relatively large capacities to commence production in H2. There is a clear expectation for an increase in demand for limonite ore in the future. Additionally, the Halmahera Island will gradually enter the rainy season, leading to an increase in cross-island procurement demand. Overall, limonite ore prices are more likely to rise than fall.
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