High-carbon ferrochrome prices continue to pull back, while cost support for stainless steel weakens continuously [SMM Nickel Morning Meeting Summary]

6.1 Morning Meeting Summary

Macro News:

(1) On Friday, data released by the US Bureau of Labor Statistics showed that the US added 139,000 non-farm jobs in May, exceeding market expectations of 130,000. The unemployment rate remained unchanged at 4.2%, in line with market expectations. The average hourly earnings in May increased by 0.4% MoM, higher than the previous 0.2% and the expected 0.3%, and rose by 3.9% YoY, higher than the previous 3.8% and the expected 3.7%. The labor force participation rate fell to 62.4% from 62.6% the previous month. Trump commented on the non-farm payrolls data: "The employment data is impressive, and the stock market is soaring!" He once again called for Powell to cut interest rates by 100 basis points.

(2) According to customs statistics, in the first five months of 2025, the total value of China's foreign trade in goods was 17.94 trillion yuan, up 2.5% YoY (the same hereinafter). Exports amounted to 10.67 trillion yuan, up 7.2%, while imports were 7.27 trillion yuan, down 3.8%. In May, the total value of China's foreign trade in goods was 3.81 trillion yuan, up 2.7%. Exports reached 2.28 trillion yuan, up 6.3%, while imports were 1.53 trillion yuan, down 2.1%.

Refined Nickel:

Spot Market:

Today, the SMM 1# refined nickel price is 122,600-125,200 yuan/mt, with an average price of 123,900 yuan/mt, up 500 yuan/mt from the previous trading day. The mainstream spot premiums for Jinchuan #1 refined nickel are quoted in the range of 2,300-2,500 yuan/mt, with an average premium of 2,400 yuan/mt, down 50 yuan/mt from the previous trading day. The spot premiums and discounts for electrodeposited nickel from mainstream domestic brands are quoted in the range of -50-300 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (NI2507) has recently shown a rebound from oversold levels. As of 11:30, SHFE nickel closed at 122,850 yuan/mt, up 710 yuan from the previous trading day, a gain of 0.58%. The recent decline in domestic nickel inventory, combined with bears reducing their positions, has been the main driving factor. However, the resistance level at 123,000 yuan/mt has not yet been breached.

Positive signals have been released from China-US economic and trade consultations. Expectations for US Fed interest rate cuts are diverging, but the weak demand situation is difficult to improve. The supply surplus continues to suppress the upside room for nickel prices, which may remain in a sideways movement within the range of 118,000-123,000 yuan/mt in the short term.

Nickel Sulphate:

On June 9, the SMM battery-grade nickel sulphate index price was 27,597 yuan/mt. The quotation range for battery-grade nickel sulphate was 27,580-28,050 yuan/mt, with the average price remaining stable WoW.

On the cost side, LME nickel prices fluctuated today. Demand side, despite signs of improvement in nickel salt demand MoM in June, overall demand remained sluggish. Affected by the presence of some raw material inventory and weak order demand, the inquiry and transaction activity of precursor enterprises for nickel salt were low during the traditional procurement period this week. Supply side, the order signing situation for nickel salt producers was poor in June, and some large nickel salt enterprises planned to conduct shutdown maintenance in June. Given the weak demand coupled with falling costs, some nickel salt producers have shown signs of loosening their quotations.

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 9, SMM reported that the average price of 8-12% high-grade NPI was 949 yuan/mtu (ex-factory, tax included), down 2 yuan/mtu from the previous working day. Supply side, domestically, nickel ore prices in the Philippines remained relatively firm, and smelters continued to experience losses, with production running at a low level. In Indonesia, the price of domestic trade saprolite ore continued to rise, pushing up smelters' cost lines again. The weak price of finished products led to continued losses for smelters. However, against the backdrop of weak demand for high-grade nickel matte, Indonesia still primarily produced high-grade NPI, resulting in a slight increase in production. Demand side, the stainless steel sector entered the off-season, with some steel mills conducting maintenance during this period, leading to a decline in production and weakened demand for high-grade NPI. Additionally, the weak price of stainless steel was transmitted to the stainless steel scrap sector, expanding the economic advantage of stainless steel scrap and putting pressure on the price of high-grade NPI. Overall, it is expected that the price of high-grade NPI will remain in the doldrums in the short term.

Stainless Steel:

On June 9, SMM reported that the SS futures market continued to show weakness, with the daytime session opening below the 12,600 yuan/mt threshold. The spot market also performed sluggishly. After entering the consumption off-season, downstream purchase willingness remained weak, with just-in-time procurement dominating. Despite a decline in overall stainless steel production in June, it remained at historically high levels, and the loose market supply situation persisted. Affected by the continued sluggish transactions, multiple steel mills lowered their ex-factory prices in the afternoon, further driving down the overall price of the stainless steel spot market.

In the futures market, the most-traded contract 2507 was in the doldrums. At 10:30 a.m., SS2507 was reported at 12,655 yuan/mt, down 45 yuan/mt from the previous trading day. The spot premiums/discounts for 304/2B in Wuxi were in the range of 465-665 yuan/mt. In the spot market, the cold-rolled 201/2B coils in Wuxi and Foshan were both reported at 7,850 yuan/mt; the cold-rolled uncut edge 304/2B coils had an average price of 13,050 yuan/mt in Wuxi and 13,050 yuan/mt in Foshan; the cold-rolled 316L/2B coils were priced at 24,050 yuan/mt in Wuxi and 24,050 yuan/mt in Foshan; the hot-rolled 316L/NO.1 coils were both reported at 23,350 yuan/mt in Wuxi and Foshan; and the cold-rolled 430/2B coils were both priced at 7,500 yuan/mt in Wuxi and Foshan.

Currently, the stainless steel market has fully entered the traditional consumption off-season, with persistent weakness in downstream demand. Despite stainless steel enterprises generally facing losses and some steel mills having launched production cut plans, the current supply scale remains at a historical high due to the large production base in the early stage, leading to a significant oversupply in the market. The pressure on traders to sell has surged. To alleviate inventory pressure, some merchants have been forced to offer discounts for sales promotions, further strengthening the market's bearish sentiment. On the raw material side, influenced by expectations for production cuts at stainless steel mills, the price of high-grade NPI struggles to rise. Meanwhile, the continuous pullback in high-carbon ferrochrome prices has continuously weakened the cost support for stainless steel. If the subsequent production cuts by stainless steel mills fall short of expectations, against the backdrop of sluggish demand during the consumption off-season, stainless steel prices may continue to remain in the doldrums in the short term.

Nickel Ore:

Philippine nickel ore prices have limited downside room in the short term due to rainfall and multiple factors from the Indonesian side

Philippine nickel ore prices rose slightly last week. The CIF prices of Philippine laterite nickel ore NI1.3% from the Philippines to China were $44-45/wmt, and the FOB prices were $34-36/wmt. The CIF prices of NI1.5% were $59-60/wmt, and the FOB prices were $49-51/wmt. In terms of supply and demand, on the supply side, although there was rainfall at major nickel ore loading points in the Philippines, the continuous rainy weather 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 facing severe losses, dampening the sentiment for raw material procurement. The demand-side support for nickel ore prices 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 deepen the reluctance of Philippine mines to budge on prices. Looking ahead, there is significant price negotiation between upstream and downstream players, coupled with price disturbances from the Indonesian side. In the short term, Philippine nickel ore prices may still hold up well, and domestic enterprises may be forced to choose between purchasing at high prices or cutting production.

Indonesia's ore premiums remain stable in June, with Indonesian high-grade NPI enterprises continuing to face losses

Prices of Indonesia's local ore strengthened last week. In terms of premiums, the mainstream premiums for Indonesia's local laterite nickel ore remained at $26-30/wmt last week, but there were some high-price transactions. Overall, the prices of saprolite ore rose slightly last 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. Regarding 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.

In terms of saprolite ore, from the supply side, frequent precipitation on Sulawesi and Halmahera islands continues to affect ore loading and supply from mines. As we enter the second half of the year (H2), the approval of additional RKAB quotas has begun, but this remains insufficient to alleviate the persistently tight supply. After some mines receive their quotas, tender prices have reached new highs, which has instead intensified the sentiment for higher prices in the short term. Looking ahead, the market remains concerned about the approval speed of subsequent additional RKAB quotas. From the demand side, Indonesia's NPI smelters are still experiencing losses, limiting their ability to accept higher nickel ore prices. However, in terms of inventory, smelters' inventory levels remain generally low, and there is still demand for just-in-time procurement. Overall, despite being constrained by downstream demand, supply remains tight, and mines still hold significant bargaining power. It is common for smelters to compete in bidding for ore. Looking ahead, as the June premium has already been agreed upon, 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 procurement prices to rise.

In terms of limonite ore, from the supply side, there have been no significant changes in limonite ore supply recently. From the demand side, 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 the commissioning of two HPAL smelting projects with relatively large capacities in H2, indicating a significant expected increase in demand for limonite ore. Additionally, 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.