Stainless steel enterprises are generally facing losses, and the market price of high-grade NPI may decline again [SMM Nickel Morning Meeting Summary]

6.19 Morning Meeting Summary

Macro News:

(1) At the 2025 Lujiazui Forum, Pan Gongsheng, Governor of the People's Bank of China, announced eight major financial policies. First, establish a trade repository for the interbank market. Second, establish an international operation center for the digital yuan. Third, establish personal credit reporting agencies. Fourth, launch a comprehensive reform pilot for offshore trade financial services in the Lingang Special Area of Shanghai. Fifth, develop free trade offshore bonds. Sixth, optimize and upgrade the functions of free trade accounts. Seventh, innovate structural monetary policy tools in Shanghai on a "pilot first" basis. Eighth, collaborate with the China Securities Regulatory Commission to study and promote the trading of RMB foreign exchange futures.

(2) On Tuesday local time, the US Senate passed a bill to establish a regulatory framework for cryptocurrency tokens pegged to the US dollar, known as stablecoins. This marks a significant milestone for the cryptocurrency industry. The bill, known as the Guiding Empowerment to National Innovation for US Stablecoins (GENIUS) Act, received bipartisan support, with several Democrats joining the majority of Republicans in supporting the proposed federal regulations. The bill passed with a vote of 68 in favor and 30 against, marking the first time that significant cryptocurrency legislation has been passed in the Senate.

Refined Nickel:

Spot Market:

Today, the SMM 1# refined nickel price is 118,500-121,150 yuan/mt, with an average price of 119,825 yuan/mt, unchanged from the previous trading day. The mainstream spot premiums quotation range for Jinchuan #1 refined nickel is 2,500-2,700 yuan/mt, with an average premium of 2,600 yuan/mt, unchanged from the previous trading day. The spot premiums/discounts quotation range for electrodeposited nickel from mainstream domestic brands is 0-400 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (NI2507) opened lower and continued to decline today, reaching a low of 118,050 yuan/mt. As of 11:30, SHFE nickel closed at 118,390 yuan/mt, down 590 yuan/mt or 0.50% from the previous trading day.

In the short term, nickel prices are expected to fluctuate rangebound within the 118,000-123,000 yuan/mt range. If Indonesia tightens its nickel ore policies, it may trigger a phased rebound. However, in the medium and long term, the pressure of supply surplus is difficult to resolve, coupled with a lack of incremental demand, limiting the upside room for nickel prices.

Nickel Sulphate:

On June 18, the SMM index price for battery-grade nickel sulphate was 27,402 yuan/mt, with a quotation range of 27,400-27,830 yuan/mt for battery-grade nickel sulphate, and the average price decreased slightly compared to yesterday.

On the cost side, nickel prices returned to fundamentals and declined slightly this week, leading to a weakening in the production cost of nickel salts. Demand side, some precursor plants started inquiries for next month's orders this week, but overall demand remained sluggish, with limited price acceptance for nickel salts. Supply side, some nickel salt smelters faced high inventory and shipment pressure, leading to loosened nickel salt quotations.

Looking ahead, given persistently mediocre downstream demand and weakened buyer bargaining power, nickel salt prices are expected to weaken further in the short term.

NPI:

June 18 (SMM) – The average price of 8-12% high-grade NPI stood at 925 yuan/mtu (ex-factory, tax included), down 2.5 yuan/mtu from the previous working day. Supply side, domestically, declining product prices widened smelter losses, with east China smelters undergoing maintenance and production cuts. In Indonesia, premiums for saprolite ore remained high recently, keeping smelter ore costs firm. Additionally, the shift to high-grade nickel matte production remained insufficient, with RKEF capacity still primarily yielding high-grade NPI, suggesting overall production may rise MoM. Demand side, major stainless steel mills maintained high long-term raw material contract ratios and achieved considerable spot order volumes earlier this month, leaving current external purchase demand weak. Coupled with high social inventory and significant destocking pressure, some mills reduced crude steel output, further weakening high-grade NPI demand. Today's market inquiries were inactive, with the supply surplus keeping prices under pressure. Overall, the short-term buyer's market persists, and high-grade NPI prices may test lower levels.

Stainless steel:

June 18 (SMM) – Today, SS futures briefly held up well after the daytime session opened but continued to fluctuate at lows. Spot market trading remained sluggish, with traders generally lacking confidence in the outlook. Some holders occasionally offered discounts on specific specifications due to shipment pressure. Downstream procurement stayed cautious, focusing on minimal restocking for rigid demand. Recent declines in high-grade NPI and high-carbon ferrochrome prices further weakened cost support, sustaining the overall market's doldrums.

Futures side, the most-traded contract 2508 weakened. At 10:30 am, SS2508 traded at 12,490 yuan/mt, down 10 yuan/mt from the previous session. Wuxi's 304/2B spot premiums/discounts ranged between 380-680 yuan/mt. In the spot market, Wuxi and Foshan's cold-rolled 201/2B coils were both quoted at 7,750 yuan/mt; cold-rolled uncut edge 304/2B coils averaged 12,850 yuan/mt in both cities; Wuxi's cold-rolled 316L/2B coils were priced at 24,000 yuan/mt, matching Foshan's; hot-rolled 316L/NO.1 coils traded at 23,350 yuan/mt in both locations; cold-rolled 430/2B coils in Wuxi and Foshan were uniformly priced at 7,500 yuan/mt.

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 compared to the same period last year, primarily due to the large production base in the early stage. Stainless steel mills and agents are facing mounting pressure to ship goods, leading to the spread of market pessimism. Traders are scrambling 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. The continuous decline in high-carbon ferrochrome prices has further weakened 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 remain high; domestic enterprises may be forced to choose between high-priced purchases or production cuts

Philippine nickel ore prices held steady last week. The CIF prices for Philippine laterite nickel ore (NI1.3%) shipped from the Philippines to China were $44-45/wmt, while the FOB prices were $34-36/wmt. The CIF prices for 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 precipitation 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 falling behind expectations. On the demand side, downstream NPI prices fell again, and domestic NPI smelters continued to face severe losses, dampening sentiment for raw material purchases. The demand-side support for nickel ore prices continued to weaken. Regarding exports to Indonesia, Indonesia's demand for Philippine nickel ore increased, and the high nickel ore prices in Indonesia continued to fuel the reluctance of Philippine mines to budge on prices. Looking ahead, with significant price negotiations between upstream and downstream players, coupled with price disruptions from the Indonesian side, Philippine nickel ore prices may continue to hold up well in the short term. Domestic enterprises may be forced to choose between high-priced purchases or production cuts.

Prices of Indonesia's local limonite ore rose this week, while saprolite ore prices held steady

Prices of Indonesia's local limonite ore rose this week, while saprolite ore prices held steady. In terms of premiums, the mainstream premium for Indonesia's local laterite nickel ore remained at $26-28/wmt this week.

For saprolite ore, the SMM delivery-to-factory price for Indonesia's local laterite nickel ore (1.6%) was $54.3-57.3/wmt, unchanged from last week. For limonite ore prices, the SMM delivery-to-factory price for Indonesia's local laterite nickel ore (1.3%) rose to $26-28/wmt, up $1/wmt WoW, a 3.8% increase. For saprolite ore, on the supply side, the rainy season remains the primary factor contributing to the insufficient supply of saprolite ore, adversely affecting ore production and transportation activities. According to feedback from multiple Indonesian mining companies, heavy rainfall has persisted, severely disrupting operations and leading to a continued tight supply of ore. Additionally, some miners have yet to receive approval for their RKAB supplementary quotas, which has partially restricted nickel ore sales in the market. On the buyer side, according to SMM's Indonesia Saprolite Ore Inventory Cycle Index, the average inventory at pyrometallurgical smelters in May increased compared to April, with an average inventory of 2.2 months. Market purchasing sentiment has weakened somewhat. Meanwhile, Indonesia's NPI smelters are still facing the dilemma of operating at a loss, making it difficult for them to withstand further increases in nickel ore prices. Therefore, it is expected that there will be limited room for nickel ore prices to rise in June.

On the limonite ore supply side, the supply of limonite ore has been stable recently. However, the upcoming rainy season in the Halmahera region is expected to impact the shipment of low-grade laterite nickel ore in the future. On the demand side, the MOROWALI Industrial Park, which had halted production due to an earlier accident, has now largely resumed production. Demand has strengthened, driving up limonite ore prices this week. Looking ahead, with two large-capacity limonite ore projects expected to commence production in H2, subsequent demand for limonite ore is still expected to increase. Meanwhile, the demand for cross-island procurement remains, which may further exacerbate the upward pressure on ore prices. Overall, the price of Indonesian limonite ore is expected to hold up well.