Stainless steel futures rise strongly, with limited rebound space for refined nickel prices [SMM Nickel Morning Meeting Summary]

6.27 Morning Meeting Minutes

Macro News:

(1) On June 26, the National Development and Reform Commission (NDRC) held a press conference at 10 a.m. Li Chao, Deputy Director of the Policy Research Office of the NDRC, stated that the third batch of trade-in policy funds for consumer goods would be allocated in July this year. Meanwhile, the NDRC would coordinate with relevant parties to adhere to the principles of greater continuity and balance, formulating monthly and weekly plans for the use of national subsidy funds across different fields to ensure the orderly implementation of the trade-in policy for consumer goods throughout the year.

(2) On the morning of June 25, Premier Li Qiang of the State Council attended and delivered a speech at the opening ceremony of the 2025 Summer Davos Forum in Tianjin. Li Qiang stated that China would continue to actively integrate into the global market, contributing what the Chinese economy can offer to what the world economy needs. Over the years, the Chinese economy has been a crucial engine for global economic growth, not only due to its stability and high growth potential but also because of its openness and interconnectedness with the world economy. The sustained and steady growth of the Chinese economy will provide strong support for accelerating the recovery of the world economy. The continuous expansion and upgrading of the Chinese market will create incremental space for reversing the downturn in international trade and commerce. The continuous breakthroughs and advancements in China's innovation will inject new vitality into global development, overcoming the lack of momentum.

Spot Market:

Today, the SMM 1# refined nickel price ranged from 120,000 to 123,300 yuan/mt, with an average price of 121,650 yuan/mt, up 2,100 yuan/mt from the previous trading day. The mainstream spot premiums quotation range for Jinchuan #1 refined nickel was 2,800-3,000 yuan/mt, with an average premium of 2,900 yuan/mt, down 100 yuan/mt from the previous trading day. The spot premiums and discounts quotation range for electrodeposited nickel from mainstream domestic brands was 0-400 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (2507) strengthened both in the night session and the daytime session: it closed up 1.19% at 119,490 yuan/mt in the night session, while LME nickel rose 1.14% to $15,075/mt. The daytime session continued the upward trend, with the price returning to the 120,000 yuan/mt level during the session. As of the midday close, SHFE nickel was quoted at 120,400 yuan/mt, up 2,460 yuan/mt or 2.09%.

With the easing of geopolitical risks, the decline in risk-averse sentiment, and the joint introduction of consumption stimulus measures by six departments including the central bank, market confidence has been boosted, and nickel prices have rebounded recently. In the medium and long-term, the surplus pattern of nickel is difficult to reverse, and the rebound space is expected to be limited.

Nickel Sulphate:

On June 26, the SMM battery-grade nickel sulphate index price was 27,199 yuan/mt, with a quotation range for battery-grade nickel sulphate of 27,200-27,600 yuan/mt, and the average price remained stable compared to yesterday.

On the cost side, influenced by the general rise in non-ferrous metals and the rebound from oversold conditions, LME nickel prices have rebounded. Overall, the immediate production cost of nickel salts has increased. Supply side, some nickel salt smelters have halted production for maintenance due to losses, while others have maintained stable quotes. Demand side, precursor plants have seen a decrease in inquiry enthusiasm due to weak demand. This week, market transactions and inquiry activity have remained at a low level.

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

NPI:

On June 26th, SMM reported that the average price of 8-12% high-grade NPI was 914 yuan/mtu (ex-factory, tax included), unchanged 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 decrease in production. 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, currently, pyrometallurgical high-grade nickel matte is also in a loss-making stage, and downstream demand is weaker than that for high-grade NPI, so there may be a slight increase in production. Demand side, social inventory destocking remains slow. Stainless steel prices continue to test historical lows, and mainstream steel mills have weak demand for raw material purchases. 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, and prices may continue to fluctuate at lows. The raw material side is under pressure, and high-grade NPI prices may continue to be in the doldrums.

Stainless Steel:

On June 26th, SMM reported that the SS futures market continued to maintain a strong upward trend, driven by the general rise in non-ferrous metals futures and news of steel mill production cuts, successfully breaking through the 12,600 yuan/mt mark. In the spot market, steel mill quotes continued to climb in the morning, and market quotes also strengthened. Although the overall increase was not as rapid as in the futures market, low-priced supplies had basically disappeared. Against the backdrop of prices stabilizing and rebounding, although the market still had a strong wait-and-see sentiment, compared to the previous period, there had been clear signs of a recovery in market transactions. This week, with the recovery in transactions, stainless steel social inventory had decreased, falling below 1 million mt again. Additionally, when steel mill quotes were at low levels previously, traders had been more active in purchasing futures orders, thus alleviating the steel mills' shipping pressure to a certain extent.

In the futures market, the most-traded contract 2508 strengthened and rose. At 10:30 a.m., SS2508 was quoted at 12,670 yuan/mt, up 19 yuan/mt from the previous trading day. The spot premiums/discounts for 304/2B stainless steel in the Wuxi area were in the range of 100-300 yuan/mt. In the spot market, the cold-rolled 201/2B coils in Wuxi and Foshan were both quoted at 7,625 yuan/mt; the cold-rolled uncut edge 304/2B coils had an average price of 12,700 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 quoted at 23,100 yuan/mt in both cities; the cold-rolled 430/2B coils were both priced at 7,350 yuan/mt in Wuxi and Foshan.

Currently, the stainless steel market is still in the traditional off-season for consumption, with downstream demand failing to match the current supply level. Additionally, uncertainties such as US tariffs remain significant, leading to a strong wait-and-see sentiment among downstream players. Despite stainless steel mills generally facing losses and production cut news emerging in the market, due to the large production base in the early stage, the current market supply remains at a historically high level for the same period, and the repair of the supply-demand relationship will take time. Both steel mill inventory and social inventory are at relatively high levels. Against the backdrop of the off-season for consumption, the de-stocking speed has slowed down significantly, putting significant pressure on stainless steel mills, agents, and traders to ship goods, thereby limiting the rebound and rise of stainless steel prices. The raw material side is also under tremendous pressure. Affected by expectations for production cuts at steel mills, only high-carbon ferrochrome has managed to maintain stable tender prices amid production cuts by overseas ferrochrome producers, but the market retail price has already fallen below the tender price. The prices of other raw materials such as high-grade NPI and stainless steel scrap have also weakened significantly, further weakening the cost support for stainless steel. The market is waiting to see how the supply-demand relationship will repair after production cuts by stainless steel mills.

Nickel Ore:

Philippine Mine Offer Prices Rise, Domestic Enterprise Losses Widen Again

Last week, the FOB price 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 affected the loading progress of nickel mines, with loading progress generally delayed compared to expectations. On the demand side, the downstream NPI price fell again, domestic NPI smelters remained severely in losses, raw material procurement sentiment 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 Indonesia's high nickel ore prices continued to deepen the reluctance to budge on prices among Philippine mines. Looking ahead, with the obvious price game between upstream and downstream players and the price disturbances from the Indonesian side, the short-term Philippine nickel ore price may remain stable at a high level. Domestic enterprise losses continue to widen, and they may be forced to choose high-priced procurement or production cuts.

HPM prices continued to decline, with prices in Indonesia fluctuating this week, but premiums remaining consistently high.

Last week, prices of Indonesia's local ore changed. In terms of premiums, the mainstream premiums for Indonesia's local laterite nickel ore remained at $26-28/wmt this week. Regarding benchmark prices, the HMA price held steady with a slight decline in the second half of June, reaching $15,221/mt, down 1.19% MoM from the previous period. Overall, the prices of saprolite ore decreased this week. The SMM delivery-to-factory prices for 1.6% Indonesia's local laterite nickel ore stood at $53.9-56.9/wmt, down $0.4/wmt WoW. For limonite ore prices, the SMM delivery-to-factory prices for 1.3% Indonesia's local laterite nickel ore held steady at $26-28/wmt, unchanged from 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 RKAB supplementary quotas began to be approved in H2, there has been no significant increase in quotas so far. Therefore, the slow approval progress has exacerbated the supply tightness of saprolite ore. In terms of demand, the SMM NPI price in Indonesia fell again this week, with Indonesian NPI smelters still operating at a cost inversion. Furthermore, the market purchasing sentiment for stainless steel weakened slightly 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, despite operating at a loss, have no choice but to passively accept the current high prices.

For limonite ore, in terms of supply, although the rainy season in Indonesia continues, there has been no significant tightness in limonite ore supply recently. In terms of demand, most HPAL projects in the MOROWALI Industrial Park have resumed production, leading to an increase in market demand for limonite ore. Additionally, with the expected commissioning of larger HPAL smelting projects in H2, there may be a significant increase in subsequent demand for limonite ore. Looking ahead, the prices of Indonesian limonite ore may hold up well.