The enthusiasm of precursor manufacturers for purchasing remains weak, and nickel salt prices may still stabilize at a low level [SMM Nickel Morning Meeting Summary]

7.9 Morning Meeting Summary

Macro News:

(1) Trump sent tariff letters to 14 countries, imposing a 25% tariff on imports from Japan and South Korea starting August 1, and tariffs ranging from 25% to 40% on imports from Malaysia, South Africa, Indonesia, Myanmar, Thailand, and others. An additional 10% tariff will be imposed on any country aligned with the BRICS' anti-US policies, and an executive order was signed extending the reciprocal tariff suspension period to August 1. White House officials stated that specific country tariffs would not be stacked with industry tariffs.

(2) Today, China allocated an additional 1 billion yuan in central budgetary investment to promote employment and income growth for key groups through work-for-relief programs. This investment will fund 1,975 projects, expected to provide local employment for 310,000 people from key groups, including those who have been lifted out of poverty, returnee migrant workers, and other rural laborers. Of the 1 billion yuan investment, 459 million yuan (45.9%) will be used for labor remuneration, further increasing the proportion of labor remuneration in central investment.

Refined Nickel:

Spot Market:

Today, the SMM #1 refined nickel price was 119,800-122,400 yuan/mt, with an average price of 121,100 yuan/mt, down 900 yuan/mt from the previous trading day. The spot premium range for Jinchuan #1 refined nickel was 1,900-2,100 yuan/mt, with an average premium of 2,000 yuan/mt, down 50 yuan/mt from the previous trading day. The spot premiums and discounts for domestic mainstream brands of electrodeposited nickel ranged from -200 to 300 yuan/mt.

Futures Market:

The most-traded SHFE nickel 2508 contract rose slightly during the night session, returning to the 121,000 yuan level. However, it continued to be in the doldrums during the daytime session, closing at 120,310 yuan/mt by midday, down 0.72%.

In the near term, nickel prices are expected to remain in the doldrums within the 118,000-123,000 yuan/mt range. With the global tariff deadline set by Trump for July 9 approaching, countries without trade agreements face the risk of higher tariffs, leading to a surge in market risk aversion, which suppresses the rebound momentum.

Nickel Sulphate:

On July 8, the SMM battery-grade nickel sulphate index price was 27,209 yuan/mt, with the quotation range for battery-grade nickel sulphate at 27,200-27,620 yuan/mt, unchanged from yesterday's average.

Cost side, as the US global tariff deadline approaches, the risk aversion due to tariff uncertainty continues, causing LME nickel prices to pull back. Overall, the immediate cost of nickel salts may decrease. Supply side, some salt producers, facing rising raw material costs, intend to raise prices, but weak buyer demand has led to limited transactions, resulting in low overall inventory and production levels. Demand side, precursor manufacturers remain cautious, having completed their stockpiling for this month at the end of last month, and are mainly observing the market.

Looking ahead, production costs are expected to pull back, coupled with weak downstream demand. Although nickel salt smelters continue to refuse to budge on prices, nickel salt prices may still stabilize at a low level.

Nickel Pig Iron (NPI):

On July 8, the average price of SMM 8-12% high-grade NPI was 905 yuan/mtu (ex-factory, tax included), down 2.5 yuan/mtu from the previous working day. Supply side, domestically, nickel ore prices in the Philippines remain firm, and smelters are still operating at a loss, with overall production remaining at a low level. In Indonesia, the pyrometallurgical nickel ore premiums have weakened slightly, and the cost line of smelters has loosened. However, with some smelters experiencing expanded production losses, there may be expectations for maintenance, and overall production may weaken slightly. Demand side, stainless steel has entered the off-season for consumption, with poor downstream demand boost. Social inventory remains at a high level, and stainless steel production may be adjusted downward, corresponding to weakened demand for high-grade NPI. In the short term, high-grade NPI prices are still under pressure.

Stainless Steel:

On July 8, SMM reported that the SS futures market strengthened again today, with the high point once approaching the 12,800 yuan/mt mark. In the spot market, despite fluctuations in futures prices and a pullback in steel mill guidance prices, retail quotations have not seen significant adjustments and remain generally stable. Although transaction conditions have improved compared to June, the extent of improvement is limited. The downstream market still maintains a strong wait-and-see sentiment, with transactions mainly relying on concessions from traders' previous low-priced cargoes. Today, the transaction price of high-grade NPI has dropped again, with a stainless steel mill in South China concluding a deal for tens of thousands of mt at 900 yuan/mtu. Affected by expectations for stainless steel mill production cuts, raw material prices continue to weaken, further eroding the cost support for stainless steel.

In the futures market, the most-traded contract 2508 has strengthened and risen. At 10:30 a.m., SS2508 was reported at 12,715 yuan/mt, up 20 yuan/mt from the previous trading day. The spot premiums/discounts for 304/2B stainless steel in Wuxi range from 105-255 yuan/mt. In the spot market, the cold-rolled 201/2B coils in Wuxi and Foshan are both reported at 7,600 yuan/mt; the cold-rolled uncut edge 304/2B coils have an average price of 12,725 yuan/mt in Wuxi and the same in Foshan; the cold-rolled 316L/2B coils are priced at 23,600 yuan/mt in Wuxi and the same in Foshan; the hot-rolled 316L/NO.1 coils are both reported at 22,900 yuan/mt in Wuxi and Foshan; and the cold-rolled 430/2B coils are both priced at 7,100 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. In addition, uncertainties such as US tariffs remain significant, leading to a strong wait-and-see sentiment in the downstream market. Although stainless steel mills generally face the dilemma of losses, and there have been news of production cuts 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 restoration of the supply-demand relationship will still take some time. Both steel mill inventory and social inventory are at relatively high levels. Against the backdrop of the off-season for consumption, the pace 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 a stable tender price amid production cuts by overseas ferrochrome producers. However, 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 eroding the cost support for stainless steel. The market is now waiting to see how the supply-demand relationship will recover after production cuts by stainless steel mills.

Nickel Ore:

Philippine nickel ore prices decline; amid smelter losses, downstream acceptance of high-priced nickel ore is limited

Last week, the prices of medium-grade nickel ore in the Philippines declined. The CIF price of Philippine laterite nickel ore (NI1.3%CIF) shipped to China was $45-47/wmt, and the FOB price was $36-38/wmt; the CIF price of NI1.5% was $58-61/wmt, and the FOB price was $51-53/wmt. In terms of supply and demand, on the supply side, rainfall in the main producing areas of southern Philippines decreased slightly compared to last week, with rainfall in the southern region of Palawan remaining unchanged from last week and almost no rainfall in the areas east of Davao. The main rainfall was concentrated in the Zambales region. Overall, precipitation had no significant impact on shipments, and nickel ore supply increased. As of July 4, China's nickel ore port inventory increased to 6.63 million wmt. Ships that had been dispatched earlier arrived at ports one after another, leading to an increase in inventory. On the demand side, the decline in NPI prices continued this week. Domestic NPI smelters are still suffering from severe losses, and the sentiment for raw material purchases has been dampened. The demand side's support for nickel ore prices continues to weaken. Looking ahead, under the influence of multiple factors such as the decline in Indonesia's local nickel ore prices last week, continued losses at downstream smelters, limited willingness to purchase at high prices, and an increase in port inventory, Philippine nickel ore prices are expected to continue to weaken.

Benchmark prices in the first half of July in Indonesia fall; pyrometallurgy ore experiences a downward trend

Nickel ore prices in Indonesia fell again last week. In terms of premiums, the mainstream premium for Indonesia's local laterite nickel ore remained at $24-26/wmt last week. In terms of benchmark prices, the HMA price in the first half of July fell slightly to 14,943 yuan/mt, down 1.83% MoM from the previous period. The SMM Indonesia's local laterite nickel ore (1.6%) delivery-to-factory price was $50.4-54.4/wmt, down $0.5 or 0.9% WoW. In terms of limonite ore prices, the SMM Indonesia's local laterite nickel ore (1.3%) delivery-to-factory price remained stable at $26-28/wmt, unchanged from last week.

For saprolite ore, supply side, due to continuous rainfall, mining and transportation operations in the main nickel ore regions of Sulawesi and Halmahera in Indonesia remained disrupted this week. Nevertheless, progress has been made in the approval of some new quotas and quota revisions under the RKAB. It is expected that the RKAB approval process will continue to advance in July and August. Therefore, influenced by this factor, nickel ore supply may further increase in the future. Demand side, most Indonesian NPI smelters continue to struggle with high nickel ore prices, with some smelters still experiencing losses, and even some smelters cutting production, leading to a decrease in procurement demand. Overall, despite the continued tightness in Indonesian nickel ore supply due to the rainy season, the downward pressure exerted by nickel iron smelters has made it difficult to maintain prices at a high level. Looking ahead, saprolite ore prices will still be in the doldrums.

For limonite ore, supply side, the current supply of limonite ore remains relatively stable, capable of meeting current market demand. Additionally, significant progress in RKAB approvals is expected within the next few months, which may drive a further increase in supply. Demand side, the production situation of MHP projects remains normal, with stable demand for limonite ore. In the long term, with the approval progress of potential supplementary quotas under the RKAB, it is expected that limonite ore prices may also be in the doldrums.