Zinc inventory at both major exchanges pulled back, with LME zinc inventory falling to a two-month low

Nickel prices remained weak, with SHFE nickel futures fluctuating downward. The most-traded contract closed 0.92% lower at 118,570 yuan/mt. The prices of laterite ore from the Philippines remained firm at the ore end, but high-priced ore continued to squeeze the profits of mid- and downstream products, leading to a certain deviation between the trends of nickel ore and the futures market. Nickel prices have continued to weaken recently, approaching the cost of pyrometallurgy and compressing the profits of nickel enterprises. However, there have been no large-scale production cuts by enterprises so far, and the supply surplus situation has not significantly eased.

The nickel ore market has been relatively quiet, with ore prices remaining stable. It is expected that nickel ore resources for July will start to be sold this week. In the Philippines, mines are mostly adopting a wait-and-see attitude and are cautious in quoting prices. Some downstream iron plants have entered the raw material procurement and stockpiling period, but due to profit losses, they are not highly willing to accept excessively high nickel ore prices. In Indonesia, the shortage of nickel ore supply persists, with declining ore grades and high prices for high-grade ore remaining. The domestic trade benchmark price for June (Phase II) is expected to fall by approximately $0.3-0.5. The current domestic trade premium remains at 26-28, and subsequent premiums will enter a negotiation period.

The end-use demand for new energy is in the off-season, with production schedules for ternary cathode materials in June declining. Battery manufacturers have previously stockpiled sufficient raw materials, resulting in low procurement demand. Nickel sulphate prices have remained firm, maintaining a relatively high level. The tight supply situation for intermediate products at the raw material end continues, with intermediate product prices remaining firm. However, with some nickel iron production lines currently switching to produce nickel matte, the tight supply situation for intermediate products may improve, putting pressure on further nickel sulphate price increases. Downstream ternary cathode manufacturers are not highly willing to accept high-priced nickel sulphate, and with demand remaining weak, nickel sulphate continues to face pressure. In the short term, supported by nickel sulphate costs, industrial profits remain low, and prices are maintained at cost-based pricing levels.

Regarding the outlook, Jinrui Futures commented that with the resource end being suppressed by stainless steel, the driving force for cost increases in Class 1 nickel has weakened. Meanwhile, as Indonesia's supply-side policies have become more stable, the sustainability of additional support for Class 1 nickel demand in H2 is in question. The driving force for nickel price increases has weakened, while there is still cost support on the downside. Anchoring on the cost of pyrometallurgical electrodeposited nickel, the price range may converge.