Surplus Pattern of Refined Nickel Hard to Reverse, Stainless Steel Prices Test Rising [SMM Nickel Morning Meeting Summary]

6.26 Morning Meeting Summary

Macro News:

(1) Michael Barr, a governor of the US Fed and recently retired as the vice chair for supervision, stated on Tuesday that he expects US President Trump's tariff policies to exert upward pressure on prices, and this pressure may not be temporary. Despite Barr's view that inflation is currently moving "slowly and unevenly" towards the Fed's 2% target, he hinted in his latest speech that "there is no urgency to cut interest rates now."

(2) To maintain ample liquidity in the banking system, on June 25, 2025, the central bank will conduct a 300 billion yuan MLF (medium-term lending facility) operation through fixed quantity, interest rate tendering, and multiple price winning bids, with a one-year term. Given that 182 billion yuan of MLF will mature in June, a net injection of 118 billion yuan will be achieved. This also marks the fourth consecutive month that the central bank has renewed the maturing MLF in excess.

Spot Market:

Today, the SMM 1# refined nickel price ranges from 118,050 to 121,050 yuan/mt, with an average price of 119,550 yuan/mt, up 550 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan #1 refined nickel is 2,900-3,100 yuan/mt, with an average premium of 3,000 yuan/mt, unchanged from the previous trading day. The spot premiums and discounts quotation range for electrodeposited nickel from mainstream domestic brands is 0-400 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (2507) opened higher today and recovered: it closed down 0.39% at 117,690 yuan/mt in the night session, while LME nickel closed up 0.44% at $14,905/mt; it opened higher and moved higher in the daytime session, surging rapidly to 117,930 yuan/mt during the session. As of the midday close, SHFE nickel was quoted at 117,990 yuan/mt, up 760 yuan/mt, or 0.65%.

The surplus pattern of refined nickel is difficult to reverse, and the price center may gradually move lower. It is expected that nickel prices will maintain sideways movement within the range of 115,000-121,000 yuan/mt. The support from ore prices and the cost line form the bottom, but macro risk-aversion sentiment and inventory pressure inhibit the rebound momentum.

Nickel Sulphate:

On June 25, the SMM battery-grade nickel sulphate index price was 27,200 yuan/mt, and the quotation range for battery-grade nickel sulphate was 27,200-27,600 yuan/mt, with the average price remaining stable compared to yesterday.

On the cost side, affected by the extension of the cobalt ban in the DRC, the demand for nickel from ternary materials has been suppressed, driving LME nickel prices to continue to decline. Overall, the production cost of nickel salts has decreased. Supply side, the extension of the cobalt ban has driven up the reluctance to budge on prices among some nickel salt smelters, and some have already stopped quoting prices. Demand side, some precursor plants have raised their price acceptance for nickel salts. Most precursor plants have adopted a wait-and-see approach. Overall, the extension of the cobalt ban has boosted sentiment towards nickel sulphate, but downstream demand remains weak.

Looking ahead, it is expected that sentiment will drive nickel salt prices higher, but the extent of the increase will still be constrained by weak downstream demand.

NPI:

On June 25, SMM reported that the average price of 8-12% high-grade NPI was 914 yuan/mtu (ex-factory, tax included), down 1 yuan/mtu from the previous working day. Supply side, domestically, nickel ore prices in the Philippines have continued to fluctuate upward, resulting in severe losses for domestic smelters. Some smelters have reduced their production loads, with expectations of a decline in output. In Indonesia, the domestic trade premium for pyrometallurgical nickel ore remains firm. The decline in finished product prices has led to continued losses for smelters. However, pyrometallurgical high-grade nickel matte is also currently in a loss-making stage, and downstream demand is weaker than that for high-grade NPI, so there may be a slight increase in output. Demand side, destocking of social inventory remains slow. Stainless steel prices continue to test historical lows, and mainstream steel mills have weak demand for raw material procurement. Additionally, with the expanding economic advantage of stainless steel scrap as a raw material, the demand for high-grade NPI may weaken. Overall, in the short term, stainless steel will still focus on active destocking, with prices likely to remain fluctuating at lows. The raw material side is under significant pressure, and the price of high-grade NPI may continue to be in the doldrums.

Stainless Steel:

On June 25, SMM reported that the SS futures market strengthened and rose, approaching the 12,600 yuan/mt mark at one point, showing an overall strong trend during the day. In the spot market, Tsingshan raised its stainless steel plate prices by 50-100 yuan/mt in the morning. Coupled with the boost from yesterday's news of production cuts by steel mills, market confidence has recovered somewhat, with prices rising accordingly. Inquiry activity has increased, and transactions of low-priced goods have picked up. However, the overall market price is still at a relatively low level, and there are still doubts about the actual production cuts by steel mills. The current price is still in a tentative upward phase.

In the futures market, the most-traded 2508 contract strengthened and rose. At 10:30 a.m., SS2508 was reported at 12,480 yuan/mt, up 140 yuan/mt from the previous trading day. In the Wuxi region, the spot premiums and discounts for 304/2B stainless steel ranged from 190-390 yuan/mt. In the spot market, the cold-rolled 201/2B coils in Wuxi and Foshan were both reported at 7,625 yuan/mt; the cold-rolled uncut edge 304/2B coils had an average price of 12,600 yuan/mt in Wuxi and the same in Foshan; the cold-rolled 316L/2B coils were priced at 23,800 yuan/mt in Wuxi and the same in Foshan; the hot-rolled 316L/NO.1 coils were both reported at 23,100 yuan/mt in Wuxi and Foshan; and the cold-rolled 430/2B coils were both priced at 7,350 yuan/mt in Wuxi and Foshan.

Currently, the stainless steel market is in the traditional off-season for consumption, with downstream demand remaining persistently weak. Despite the widespread losses faced by enterprises, some steel mills have already begun implementing production cuts. However, due to the large production base in the earlier period, the current market supply remains at a historically high level for the same period, and the contradiction of oversupply is particularly prominent. The selling pressure on stainless steel mills, agents, and traders has risen sharply. Both steel mill inventory and social inventory remain high, and market pessimism has spread widely. Traders are scrambling to sell, leading to a continuous decline in stainless steel quotes. The raw material side is also under tremendous pressure. Affected by expectations for production cuts at steel mills, the prices of raw materials such as high-grade NPI and stainless steel scrap have also weakened simultaneously, further weakening the cost support for stainless steel. The market is waiting to see how the supply-demand relationship will recover after production cuts at stainless steel mills.

Nickel Ore:

Philippine Mine Offer Prices Rise, Domestic Enterprise Losses Widen Again

Last week, the FOB prices of Philippine nickel ore rose slightly, while domestic transaction prices remained stable for the time being. The CIF price of Philippine laterite nickel ore (NI1.3%) from the Philippines to China was $46-47/wmt, and the FOB price was $37-38/wmt. The CIF price of NI1.5% was $59-61/wmt, and the FOB price was $52-53/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 of nickel mines, which was generally delayed compared to expectations. On the demand side, the downstream NPI prices fell again, and domestic NPI smelters continued to suffer severe losses. The sentiment for raw material procurement was frustrated, and 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 deepen the reluctance of Philippine mines to budge on prices. Looking ahead, the current price negotiations between upstream and downstream parties are evident, coupled with the price disturbances from the Indonesian side. In the short term, Philippine nickel ore prices may remain stable at a high level, while domestic enterprise losses continue to widen, forcing them to choose between high-priced procurement or production cuts.

HPM Prices Continue to Fall, Indonesian Prices Change This Week, But Premiums Remain High

Last week, there were changes in the prices of Indonesia's local ore. In terms of premiums, the mainstream premium for Indonesia's local laterite nickel ore this week remained at $26-28/wmt. Regarding the benchmark price, the HMA price in the second half of June remained stable with a slight decline, at $15,221/mt, down 1.19% MoM from the previous period. Overall, the prices of saprolite ore have decreased this week. The SMM delivery-to-factory price of Indonesia's local laterite nickel ore (1.6%) was $53.9-56.9/wmt, down $0.4/wmt WoW. In terms of limonite ore prices, the SMM delivery-to-factory price of Indonesia's local laterite nickel ore (1.3%) remained stable at $26-28/wmt, the same as last week.

For saprolite ore, in terms of supply, the ongoing rainy season in Sulawesi and Halmahera remains a key constraint on mining and transportation activities. Additionally, although Indonesia's supplementary RKAB quotas began to be approved in H2, there has been no significant increase in quotas observed so far. Therefore, the slow approval process has exacerbated the tight supply situation of saprolite ore. On the demand side, this week, the NPI price in Indonesia, as reported by SMM, fell again, and Indonesian NPI smelters are still operating at a cost inversion. Furthermore, the market purchasing sentiment for stainless steel has weakened somewhat due to production cuts at some smelters. However, given the aforementioned tight ore supply situation, Indonesian smelters, in order to maintain the supply of raw materials needed for production, have to passively accept the current high prices despite operating at a loss.

For limonite ore, in terms of supply, although the rainy season in Indonesia continues, there has been no significant tightening in the supply of limonite ore recently. On the demand side, most of the HPAL projects in the MOROWALI Industrial Park have resumed production, and market demand for limonite ore has increased. Additionally, with the expected commissioning of larger HPAL smelting projects in H2, there may be a significant increase in the demand for limonite ore in the future. Looking ahead, the price of limonite ore in Indonesia may hold up well.