[SMM Weekly Review of Nickel Ore Market] Are nickel ore prices in the Philippines continuing to weaken? Indonesia's RKAB quota is 364 million mt, and are nickel ore prices weakening?

Philippine nickel ore prices remain weak; port arrivals expected to increase in Q3

This week, Philippine nickel ore prices declined. The CIF price of Philippine red laterite nickel ore (NI1.3%) shipped to China was $44-46/wmt, and the FOB price was $35-37/wmt; the CIF price of NI1.5% was $57-60/wmt, and the FOB price was $50-52/wmt. From the supply and demand perspective, the impact of rainfall on mining areas in the main producing regions of the Philippines was relatively small. Entering July, it is expected that the overall shipment volume in Q3 will remain at a high level, with continued increases in ore port arrivals and sufficient supply. As of Friday, July 11th, China's nickel ore port inventory increased to 7.2 million wmt. Ships dispatched earlier have arrived at ports one after another, leading to an increase in inventory. On the demand side, NPI prices continued to fall this week. Domestic NPI smelters are still experiencing severe losses, severely restricting their acceptance of high-priced raw materials. Meanwhile, some NPI smelters in Indonesia have halted production for maintenance, weakening support from the demand side. In terms of ocean freight rates, they continued to rise this week. As of Friday, July 11th, the ocean freight rate from the Philippines to Tianjin Port increased to an average of $12.5/mt. It is expected that in the short term, with shipment volumes entering a peak period and a shortage of vessels, ocean freight rates may continue to rise. Looking ahead, under the influence of multiple factors such as 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.

RKAB quota for 2025 is 364 million tons; nickel ore prices are on a downward trend

This week, Indonesian nickel ore prices fell again. In terms of premiums, the mainstream premium for Indonesia's local laterite nickel ore remained at $24-26/wmt this week; the SMM delivery-to-factory price of Indonesia's local laterite nickel ore (1.6%) was $50.4-53.9/wmt, down $0.25 WoW, with a decline of 0.5%. In terms of limonite ore prices, the SMM delivery-to-factory price of Indonesia's local laterite nickel ore (1.3%) remained stable at $26-28/wmt, unchanged from last week.

Regarding saprolite ore, from the supply side, Meidy Katrin Lengkey, Secretary General of APNI (Indonesia Nickel Association), revealed in an interview with CNBC Indonesia that the approved RKAB quota for nickel ore in 2025 is as high as 364 million tons, while the actual production is only 120 million tons. From the demand side, downstream smelters are still in the loss-making stage, with weak production drivers and low production volumes. Overall, although the supply of Indonesian nickel ore remains tight due to the impact of the rainy season, with the subsequent approval of additional RKAB quotas in Indonesia and considering the losses at downstream smelters, their acceptance of high-priced nickel ore is limited. Looking ahead, saprolite ore prices will remain in the doldrums.

As for limonite ore, supply side, the current supply of limonite ore remains relatively stable, meeting the current market demand. In addition, significant progress in the additional RKAB quotas may drive a further increase in supply. Demand side, the production of MHP projects is normal, with some MHP producers increasing their output, and overall demand is steadily increasing. In the long term, with the approval progress of the additional RKAB quotas, it is expected that limonite ore prices may have downside room.