Macro sentiment shows marginal improvement, while the long-term nickel surplus pattern is difficult to reverse [SMM Nickel Morning Meeting Summary]

7.1 Morning Meeting Minutes

Macro News:

(1) Trump: A ceasefire in Gaza may be "close" to being reached and could be achieved within a week; sanctions on Iran would be lifted if it agrees to peace, but air strikes on Iran could be reconsidered if it continues enrichment activities. He does not believe Iran is hiding some of its enriched uranium before the US launches an attack; the US Senate rejected a proposal to limit Trump's power to wage war against Iran.

(2) US consumer spending unexpectedly fell by 0.1% in May, lower than the market expectation of a 0.1% increase. Inflation rose mildly, with the US core PCE price index annual rate recording 2.7% in May, higher than the expected 2.6% and hitting a new high since February 2025. The US core PCE price index monthly rate recorded 0.2% in May, higher than the market expectation of a flat 0.1%. Traders increased their bets that the US Fed would cut interest rates three times in 2025.

Refined Nickel:

Spot Market:

Today, the SMM #1 refined nickel price is 120,900-123,600 yuan/mt, with an average price of 122,250 yuan/mt, down 50 yuan/mt 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, down 200 yuan/mt from the previous trading day. The spot premiums and discounts quotation range for electrodeposited nickel from mainstream domestic brands is -150-400 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (2508) opened lower and fell directly below 121,000 yuan/mt in the morning session, then maintained a small fluctuating trend. By the close of the morning session, SHFE nickel was quoted at 120,840 yuan/mt, up 210 yuan/mt, or 0.17%.

Macro sentiment has improved marginally, and nickel prices are expected to fluctuate mainly around the 120,000 yuan/mt level in the short term. However, with downstream demand currently in the off-season, the long-term surplus pattern of nickel is difficult to reverse, and the price center may gradually move lower.

Nickel Sulphate:

On June 30, the SMM battery-grade nickel sulphate index price was 27,192 yuan/mt, with a quotation range for battery-grade nickel sulphate of 27,200-27,600 yuan/mt, and the average price remained stable WoW.

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. From the supply side, some nickel salt smelters have halted production for maintenance due to losses, while some have maintained stable quotations. From the demand side, due to weak demand, precursor plants have reduced their enthusiasm for inquiries. Market transaction and inquiry activity remained at a low level this week.

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

NPI:

On June 30, the average price of SMM 8-12% high-grade NPI was 912.5 yuan/mtu (ex-factory, tax included), down 0.5 yuan/mtu from the previous working day. Supply side, domestically, nickel ore prices in the Philippines continued to fluctuate upward, leading to severe losses for domestic smelters. With weakened production incentives, production was expected to decline. In Indonesia, nickel ore premiums saw a slight decrease, alleviating the losses for smelters but to a limited extent. Low finished product prices prompted some smelters to reduce production loads, resulting in weakened production. Demand side, stainless steel entered the traditional consumption off-season, and the spot prices of stainless steel did not see a significant boost. Stainless steel production was expected to decrease, leading to weakened demand for high-grade NPI. Additionally, with long-term agreements from downstream steel mills already meeting part of the demand, spot order purchases in the market were sluggish. In the short term, high-grade NPI prices remained under pressure.

Stainless Steel:

On June 30, SMM reported that the SS futures market first rose and then fell, but overall remained stable above 12,600 yuan/mt. In the spot market, some stainless steel traders slightly and tentatively raised the prices of 304 stainless steel today. However, downstream purchase willingness was weak, and transaction conditions were not ideal. Stimulated by the news of production cuts from large stainless steel mills last week, the market had already achieved a round of increases, but the momentum for further increases this week had significantly weakened. Against the backdrop of the traditional off-season, it was difficult to achieve a short-term recovery in downstream end-use consumption. The supply-demand imbalance in the market still required further production cuts from stainless steel mills to alleviate.

In the futures market, the most-traded 2508 contract first rose and then fell. At 10:30 a.m., SS2508 was reported at 12,650 yuan/mt, up 30 yuan/mt from the previous trading day. In the Wuxi region, the spot premiums and discounts for 304/2B stainless steel ranged from 170-370 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 12,750 yuan/mt in Wuxi and 12,750 yuan/mt in Foshan; the cold-rolled 316L/2B coils were priced at 23,800 yuan/mt in Wuxi and 23,800 yuan/mt 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 7,300 yuan/mt in Wuxi and Foshan.

Currently, the stainless steel market is still in the traditional consumption off-season, 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 the dilemma of losses and news of production cuts emerging in the market, due to the large base of previous production, current market supply remains at a historically high level for the same period. The restoration of the supply-demand relationship still requires time. Both steel mill inventory and social inventory are at relatively high levels. Against the backdrop of the off-season for consumption, the rate of inventory reduction has slowed down significantly, putting significant pressure on stainless steel mills, agents, and traders to ship goods, thereby limiting the rebound and rise in stainless steel prices. The raw material side is also under immense 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. However, the market retail price has already fallen below the tender price. Prices for other raw materials, such as high-grade NPI and stainless steel scrap, have also weakened significantly, further eroding the cost support for stainless steel. The market is waiting to see how the supply-demand relationship will improve after production cuts by stainless steel mills.

Nickel Ore:

Philippine nickel ore prices remain stable. Amid losses at smelters, downstream acceptance of high-priced nickel ore is limited.

Last week, the FOB price of Philippine nickel ore remained stable, and domestic transaction prices also held steady temporarily. The CIF price of Philippine red laterite nickel ore (NI1.3%) shipped 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, continuous rainfall during the week significantly impacted the loading progress at nickel mines, with loading progress generally delayed compared to expectations. On the demand side, NPI prices continued to fall this week, and domestic NPI smelters still faced severe losses. The sentiment for raw material purchases was dampened, and the demand side's support for nickel ore prices continued to weaken. Looking ahead, under the influence of multiple factors such as the decline in Indonesia's local nickel ore prices this week, continued losses at downstream smelters, and limited willingness to purchase at high prices, Philippine nickel ore prices may weaken.

Last week, there were some changes in the prices of Indonesian nickel ore, with pyrometallurgy ore experiencing a downward trend.

This week, the prices of Indonesia's local nickel ore have fallen. In terms of premiums, the mainstream premium for Indonesia's local red laterite nickel ore this week has dropped to $24-26/wmt. Currently, the SMM delivery-to-factory price for Indonesia's local red laterite nickel ore with 1.6% nickel content is $50.9-54.9/wmt, a decrease of $2.5 WoW. For limonite ore prices, the SMM delivery-to-factory price for Indonesia's local red laterite nickel ore with 1.3% nickel content has remained stable at $26-28/wmt, the same as last week.

Regarding pyrometallurgy ore, on the supply side, Sulawesi and Halmahera, as the main nickel ore mining regions, have still been disrupted by frequent precipitation during the week, with the mining and transportation processes at some mines hindered. Nevertheless, the approval of some supplementary RKAB quotas may be expected to progress. After entering July, the progress of RKAB approvals may accelerate. Demand side, due to persistent high operating losses, most Indonesian NPI smelters struggle to withstand the continuous high premiums. Overall, while Indonesia's saprolite ore remains in a tight state, downstream enterprises continue to exert pressure for a reduction in premiums to ensure affordable nickel ore purchases. The HMA price in the first half of July has already fallen. Looking ahead, there is still downside room for prices in July.

Regarding limonite ore, supply side, supported by several months of inventory accumulated after the QMB accident in March, the current supply of limonite ore in Sulawesi remains relatively stable, meeting current market demand. However, it should be noted that the rainy season in Sulawesi and Halmahera continues, and if it persists into Q3, it may trigger supply risks. Demand side, two major HPAL projects are expected to commence production in H2 this year, which may significantly drive up market demand. Therefore, there is still demand for limonite ore. Looking ahead, limonite ore prices in Indonesia are more likely to rise than fall.