According to the latest market data, the weekly average price of SMM 8-12% high-grade NPI was 909.8 yuan/mtu (ex-factory, tax included) this week, down 5.4 yuan/mtu from the previous week's average. Meanwhile, the FOB index price of Indonesian NPI was $110.9/mtu, down $0.2/mtu from the previous week. Overall, high-grade NPI prices remained in the doldrums this week.
Supply side, in the domestic market, the CIF price of Philippine nickel ore was high, significantly increasing smelters' production costs. Some smelters in northern China reduced their production loads, and due to the decline in the grade of Philippine nickel ore, domestic metal production is expected to weaken. In Indonesia, the production costs of mainstream smelters have inverted, with some smelters already undergoing maintenance. Additionally, some production lines that can be converted to produce high-grade nickel matte have started doing so, which may lead to a decline in Indonesian high-grade NPI production.
Demand side, the stainless steel futures market showed an upward trend this week, with spot prices picking up. However, the extent of social inventory destocking was not significant, and stainless steel mills' sentiment towards raw material procurement remained weak. Nevertheless, traders still had restocking needs, but due to limited retail sales from upstream smelters, transaction prices rose slightly. Therefore, overall, it is expected that high-grade NPI prices will continue to remain in the doldrums in the short term. From the perspective of the basis between high-grade NPI and refined nickel, the average basis of high-grade NPI against refined nickel was 305.3 yuan/mtu this week, widening by 32.4 yuan/mtu from the previous week.
Regarding refined nickel, macro-wise, the sixth meeting of the Central Financial and Economic Affairs Commission held on July 1 emphasized the need to deeply promote the construction of a unified national market, focusing on key and difficult issues, and regulating enterprises' low-price and disorderly competition in accordance with laws and regulations. It was suggested to guide enterprises to improve product quality and promote the orderly exit of backward production capacity. This anti-cut-throat competition policy covers multiple industries, and the non-ferrous and ferrous metals markets have also shown an upward repair trend. Fundamentals side, domestic refined nickel production has been declining continuously, while demand from downstream industries such as stainless steel and alloys remains steady, leading to a volatile repair in nickel prices. The price difference between high-grade NPI and refined nickel still exists, which has further widened the average basis of high-grade NPI against refined nickel. It is expected that this basis will continue to widen next week. Cost side, calculating the cash cost of high-grade NPI based on nickel ore prices 25 days ago, the losses at high-grade NPI smelters worsened this week. On the raw material side, auxiliary material prices stabilized and bottomed out this week. Driven by macro sentiment, prices of ferrous metals began to rebound and recover after a prolonged period of weakness. This week, the auxiliary material cost line of smelters remained stable. On the ore supply side, driven by stronger demand in Indonesia, the price of nickel ore in the Philippines continued its generally stable with slight rise trend. However, due to the continued decline in finished product prices, the losses at smelters worsened this week.
In summary, it is expected that next week, with the support of macro policies, auxiliary material prices will operate steadily, and the auxiliary material cost line of smelters will remain stable. The CIF price of nickel ore from the Philippines may weaken slightly due to severe losses at smelters, and the raw material cost of smelters may loosen, thereby alleviating the extent of smelters' losses.
![[SMM Nickel Midday Commentary] On March 26, influenced by expectations surrounding the policy of “Indonesia's proposed levy of a nickel export tax,” nickel prices rose significantly](https://imgqn.smm.cn/usercenter/CjEnN20251217171733.jpg)
