Overall demand for nickel salts remains in a sluggish phase, with some nickel salt producers showing signs of loosening their price quotes [SMM Nickel Morning Meeting Summary]

Summary of the Morning Meeting on June 11

Macro News:

(1) On June 9, the State Council conducted its 14th thematic study session on "deepening the reform of the mechanism for the commercialization of scientific and technological achievements, and promoting the integrated development of scientific and technological innovation and industrial innovation." Premier Li Qiang of the State Council, while presiding over the session, emphasized the need to thoroughly study and implement the important instructions of General Secretary Xi Jinping and the relevant decisions and deployments of the CPC Central Committee. Through coordinated efforts in multiple aspects, efforts should be made to break through the bottlenecks in the commercialization of scientific and technological achievements, effectively improve the efficiency of commercialization, and promote innovative development.

(2) According to data from the National Bureau of Statistics (NBS), in May, the Consumer Price Index (CPI) decreased by 0.2% MoM and 0.1% YoY. The core CPI, excluding food and energy prices, increased by 0.6% YoY, with the growth rate expanding by 0.1 percentage points from the previous month. The Producer Price Index (PPI) for industrial products decreased by 0.4% MoM, the same rate of decline as the previous month, and decreased by 3.3% YoY, with the rate of decline expanding by 0.6 percentage points from the previous month. Prices in some sectors showed marginal improvement.

Refined Nickel:

Spot Market:

Today, the SMM 1# refined nickel price is 121,500-124,100 yuan/mt, with an average price of 122,800 yuan/mt, a decrease of 1,100 yuan/mt from the previous trading day. The quotation range for spot premiums of Jinchuan #1 refined nickel is 2,300-2,500 yuan/mt, with an average premium of 2,400 yuan/mt, unchanged from the previous trading day. The quotation range for spot premiums and discounts of electrodeposited nickel from major domestic brands is -50-300 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (NI2507) opened lower in the night session and fluctuated downward, continuing to trade in the doldrums in the daytime session. As of 11:30, SHFE nickel closed at 121,600 yuan/mt, a decrease of 1,090 yuan or 0.89% from the previous trading day.

Positive signals have been released from the China-US economic and trade consultations, and expectations for US Fed interest rate cuts are diverging. However, the weak demand situation is difficult to improve, and the supply surplus continues to suppress the upside room for nickel prices. In the short term, nickel prices may fluctuate rangebound between 118,000-123,000 yuan/mt.

Nickel Sulphate:

On June 10, the SMM index price for battery-grade nickel sulphate was 27,594 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 a MoM rebound in nickel salt demand in June, overall demand remains in a sluggish phase. Affected by the presence of some raw material inventories and weak order demand, the inquiry and transaction activity of precursor enterprises for nickel salts were low during the traditional procurement period this week. Supply side, nickel salt producers' order-signing performance for June was poor this week, with some large nickel salt enterprises planning to suspend production for maintenance in June. Given weak demand and falling costs, some nickel salt producers have shown signs of loosening their quotes.

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):

As of June 10, the average price of SMM 8-12% high-grade NPI was 946 yuan/mtu (ex-factory, tax included), down 3 yuan/mtu from the previous working day. Supply side, domestically, nickel ore prices in the Philippines remain relatively firm, with smelters continuing to suffer losses, and production running at a low level. In Indonesia, the price of domestic trade saprolite ore continues to rise, pushing up smelters' cost lines again. The weak price of finished products has led to continued losses for smelters. However, against the backdrop of weak demand for high-grade nickel matte, Indonesia still focuses on high-grade NPI as its main product, resulting in a slight increase in production. Demand side, the stainless steel sector has entered the off-season, with some steel mills undergoing maintenance during this period, leading to a decline in production and weakened demand for high-grade NPI. Additionally, the weak price of stainless steel has been transmitted to the stainless steel scrap sector, expanding the economic advantage of stainless steel scrap and putting pressure on high-grade NPI prices. Overall, high-grade NPI prices are expected to remain in the doldrums in the short term.

Stainless Steel:

As of June 10, the SS futures market suffered a sharp setback, with futures prices plunging significantly and breaking through the key threshold of 12,500 yuan/mt, eventually closing at 12,460 yuan/mt. The persistent sluggish trading conditions in the spot market have led to a continuous buildup of finished product inventories at stainless steel mills, increasing the pressure to hold prices firm. In the morning, news of a major steel mill canceling price limits spread rapidly, further exacerbating market panic. Traders' willingness to sell increased significantly, and they adopted profit-yielding sales promotion strategies, leading to frequent appearances of low-priced goods in the market. Despite prices reaching a cyclical low, the continuous downward trend has intensified downstream buyers' wait-and-see sentiment, with no substantial improvement in market trading conditions.

In the futures market, the most-traded 2508 contract weakened and pulled back. At 10:30 a.m., SS2508 was quoted at 12,545 yuan/mt, down 110 yuan/mt from the previous trading day. The spot premiums/discounts for 304/2B in Wuxi ranged from 425-625 yuan/mt. In the spot market, the cold-rolled 201/2B coils in Wuxi and Foshan were both quoted at 7,850 yuan/mt; the cold-rolled uncut edge 304/2B coils had an average price of 12,925 yuan/mt in Wuxi and 12,925 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 quoted at 23,350 yuan/mt in both 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 is mired in the traditional consumption off-season, with persistently weak downstream demand. Despite widespread losses among enterprises and production cuts implemented by some steel mills, the current supply remains at historically high levels due to the large production base in the early stage, exacerbating the oversupply in the market. Stainless steel mills and agents are facing mounting pressure to ship goods. As steel mills cancel price floors, market pessimism spreads, and traders rush to sell, pushing stainless steel quotes lower. The raw material side is also under pressure. Affected by expectations for production cuts at steel mills, the upward momentum of high-grade NPI prices has been hindered; high-carbon ferrochrome prices continue to decline, further weakening the cost support for stainless steel. If the subsequent production cuts fall short of expectations, against the backdrop of weak demand during the off-season, the short-term trend of weak stainless steel prices is unlikely to reverse.

Nickel Ore:

Philippine nickel ore prices have limited downside in the short term due to rainfall and multiple factors in Indonesia

Philippine nickel ore prices rose slightly last week. The CIF prices of Philippine laterite nickel ore (NI1.3%) shipped 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 NPI prices downstream have stabilized, domestic NPI smelters are still suffering severe losses, dampening the sentiment for raw material procurement and continuously weakening the demand-side support for nickel ore prices. In terms of 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 strengthen 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, Philippine nickel ore prices may continue to hold up well in the short term, forcing domestic enterprises to choose between purchasing at high prices or cutting production.

Indonesia's ore premium remains stable in June, with Indonesian high-grade NPI enterprises continuing to suffer losses

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