US tariff threats trigger market risk-off sentiment; macro risk-off sentiment suppresses nickel price rebound momentum [SMM Nickel Morning Meeting Summary]

7.1 Morning Meeting Minutes

Macro News:

(1) Trump: Tariffs will take effect on August 1 without any extensions. A 50% tariff will be imposed on imported copper, while pharmaceutical tariffs may reach as high as 200%, but pharmaceutical manufacturers will be given 18 months to adjust. Tariffs on semiconductors will be announced soon, though the tariff letter to the EU may take two more days to issue.

(2) On July 9, the State Council Information Office held a press conference on the "High-Quality Completion of the 14th Five-Year Plan." Zheng Shanjie stated that China's average economic growth rate reached 5.5% in the first four years, and the economic increment during the 14th Five-Year Plan period will exceed 35 trillion yuan.

Refined Nickel:

Spot Market: Today, the SMM #1 refined nickel price stood at 119,000-121,300 yuan/mt, with an average of 120,150 yuan/mt, down 950 yuan/mt from the previous trading day. The mainstream spot premium for Jinchuan #1 refined nickel was quoted at 1,900-2,100 yuan/mt, averaging 2,000 yuan/mt, flat WoW. The spot premiums/discounts for domestic mainstream brands of electrodeposited nickel ranged from -100 to 300 yuan/mt.

Futures Market: The most-traded SHFE nickel contract (2508) opened lower in the night session and continued to decline, extending its weak performance into the daytime session, with prices falling below 119,000 yuan/mt. By midday, SHFE nickel was quoted at 118,960 yuan/mt, down 1.35%. In the near term, nickel prices may fluctuate weakly between 118,000-123,000 yuan/mt. US tariff threats have triggered a sharp rise in market risk aversion, with macro sentiment suppressing rebound momentum.

Nickel Sulphate:

On July 9, the SMM battery-grade nickel sulphate index price was 27,225 yuan/mt, with quotations ranging from 27,200-27,640 yuan/mt, slightly higher than yesterday. Cost side, the approaching US global tariff deadline has sustained risk aversion due to uncertainty, further pulling back LME nickel prices. Overall, the immediate cost of nickel salts may decline. Supply side, some nickel salt smelters intend to raise prices due to recent raw material cost increases, but weak buyer demand has led to limited transactions, with overall inventory and production schedules remaining low. Demand side, precursor plants remain sluggish in purchasing, maintaining a wait-and-see stance after completing stockpiling for the month at month-end. Looking ahead, falling production costs and weak downstream demand may keep nickel salt prices stable at low levels despite smelters' efforts to hold prices.

NPI:

On July 9, the SMM average price for 8-12% high-grade NPI was 905 yuan/mtu (ex-factory, tax included), flat from the previous day. Supply side, domestically, Philippine ore prices remain firm, with smelters still operating at losses, keeping overall production low. In Indonesia, saprolite ore premiums weakened slightly, loosening smelters' cost lines, but some smelters face expanding losses, raising expectations for maintenance and potentially weakening output. Demand side, stainless steel has entered the off-season, with poor downstream demand and high social inventory, likely leading to production cuts and weaker NPI demand. Short-term NPI prices remain under pressure.

Stainless Steel:

On July 9, SMM reported that SS futures held up well during the day. The spot market remained basically stable. Influenced by yesterday's low-priced NPI transactions, retail quotations fluctuated, impacting market sentiment and increasing low-priced offers, though trading activity stayed mediocre. Currently, stainless steel mills have largely completed July contract allocations, easing pressure. However, social inventory remains high, and downstream demand struggles to improve significantly in the off-season, keeping traders under significant sales pressure.

Futures side, the most-traded contract 2508 held up well. At 10:30 AM, SS2508 was quoted at 12,745 yuan/mt, up 30 yuan/mt from the previous day. In Wuxi, the spot premiums/discounts for 304/2B ranged from 25-225 yuan/mt. In the spot market, cold-rolled 201/2B coils in Wuxi and Foshan were both quoted at 7,500 yuan/mt; cold-rolled uncut edge 304/2B coils averaged 12,700 yuan/mt in both cities; cold-rolled 316L/2B coils in Wuxi and Foshan were at 23,600 yuan/mt; hot-rolled 316L/NO.1 coils were quoted at 22,900 yuan/mt in both regions; cold-rolled 430/2B coils in Wuxi and Foshan were at 7,100 yuan/mt.

Currently, the stainless steel market remains in the traditional off-season, with downstream demand failing to match supply levels. Additionally, uncertainties like US tariffs have heightened wait-and-see sentiment. Despite widespread losses and production cut rumors, the market supply remains historically high due to earlier large output bases, requiring time for supply-demand rebalancing. Mill and social inventories are at relatively high levels, with destocking slowing noticeably in the off-season, pressuring mills, agents, and traders and limiting price rebounds. Raw material side also faces pressure: while high-carbon ferrochrome tender prices stay stable due to overseas producer cuts, retail prices are below tender levels. Other materials like high-grade NPI and stainless steel scrap have weakened further, eroding cost support. The market awaits supply-demand adjustments post-mill production cuts.

Nickel Ore:

Philippine ore prices decline as smelter losses limit downstream acceptance of high prices

Last week, medium-grade nickel ore prices in the Philippines fell. Philippine laterite nickel ore NI1.3% CIF was quoted at $45-47/wmt, while NI1.3% FOB stood at $36-38/wmt; NI1.5% CIF was at $58-61/wmt, and NI1.5% FOB at $51-53/wmt. Supply side, rainfall in southern Philippine production hubs eased slightly WoW, with Palawan's southern region unchanged and Davao's eastern area nearly dry. Major rainfall concentrated in Zambales, with minimal shipping impact. Ore supply increased. As of July 4, China's port inventory rose to 6.63 million wmt as earlier shipments arrived. Demand side, NPI prices continued falling. Domestic NPI smelters face severe losses, dampening ore procurement sentiment and weakening price support. Going forward, Philippine ore prices are expected to decline further due to lower Indonesian local ore prices, persistent smelter losses, limited high-price acceptance, and rising port inventory.

Indonesian H1 July benchmark price drops, saprolite ore enters downtrend

Indonesian nickel ore prices fell again last week. Premiums for Indonesia's local laterite nickel ore held at $24-26/wmt. The HMA benchmark price for the first half of July dropped 1.83% MoM to 14,943 yuan/mt. SMM's Indonesia local laterite nickel ore 1.6% delivery-to-factory price fell $0.5/wmt (0.9%) to $50.4-54.4/wmt. Limonite ore prices held steady, with 1.3% delivery-to-factory prices unchanged at $26-28/wmt.

Saprolite ore side, supply side, persistent rainfall continued disrupting mining and transportation in Sulawesi and Halmahera, though progress was made on new and revised RKAB approvals. Further approvals in July and August may boost supply. Demand side, most Indonesian NPI smelters struggle with high ore prices, with some operating at losses or cutting production, reducing procurement. Overall, despite tight supply due to the rainy season, smelter-driven downward pressure makes it hard to sustain high prices. Saprolite ore prices are expected to remain in the doldrums.

Limonite ore side, supply side, Sulawesi's output remains stable, meeting current demand. Additional RKAB approvals in coming months may further increase supply. Demand side, MHP projects operate normally, maintaining stable ore demand. Longer-term, potential RKAB supplement approvals may push limonite ore prices into the doldrums.