Ample supply and weak demand lead to a decline in Philippine nickel ore prices [SMM Nickel Morning Meeting Summary]

7.14 Morning Meeting Minutes

Macro News:

(1) Several US Fed officials made statements. Musalem: The impact of tariffs on inflation may not become clear until the end of the year, and the US fiscal deficit may become a financial stability issue in the future; Daly: Considering implementing an interest rate cut in the autumn, believing there will be two interest rate cuts this year. No evidence of the impact of persistent tariffs on prices has been seen; Waller reiterated the possible reasons for a July interest rate cut and stated that its easing policy is not politically motivated, and stablecoins can boost overall demand for the US dollar.

(2) Wang Yi discussed the achievements of mutually beneficial cooperation between China and ASEAN. On July 10, 2025, Wang Yi, member of the Political Bureau of the CPC Central Committee and Minister of Foreign Affairs, introduced the fruitful results of cooperation between the two sides when attending the China-ASEAN Foreign Ministers' Meeting in Kuala Lumpur. Wang Yi stated that negotiations for Version 3.0 of the China-ASEAN Free Trade Area have been fully completed, and the protocol will be signed within the year. The ASEAN-China-GCC Summit has created a new model for cross-regional cooperation.

Refined Nickel:

Spot Market:

Today, the SMM #1 refined nickel price is 121,000-123,300 yuan/mt, with an average price of 122,150 yuan/mt, an increase of 1,550 yuan/mt from the previous trading day. The mainstream spot premiums quotation range for Jinchuan #1 refined nickel is 1,900-2,100 yuan/mt, with an average premium of 2,000 yuan/mt, a decrease of 50 yuan/mt from the previous trading day. The spot premiums and discounts quotation range for electrodeposited nickel from mainstream domestic brands is -100-300 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (2508 contract) closed up 1.13% to 121,270 yuan/mt in the night session. In the daytime session, it opened higher and continued to rise, opening at 121,200 yuan/mt, reaching a high of 121,500 yuan/mt during the session. As of the midday break, SHFE nickel was quoted at 121,610 yuan/mt, up 1.42%.

Recently, the domestic concept of "anti-rat race" competition has boosted the commodity market, offsetting external negative factors, and nickel prices have rebounded along with the rise. In the future, there is still uncertainty in the external macro environment, and it is expected that nickel prices will maintain a fluctuating trend, with a price range of 118,000-123,000 yuan/mt.

Nickel Sulphate:

As of last Friday, the SMM battery-grade nickel sulphate index price was 27,202 yuan/mt, and the quotation range for battery-grade nickel sulphate was 27,200-27,640 yuan/mt, with an average price slightly higher than the previous week. Demand side, the nickel salt inventory of downstream precursor plants is relatively sufficient, and the overall market inquiry and transaction sentiment are weak this week. Due to weak demand, nickel salt smelters have not increased their acceptance of nickel salt prices. Supply side, due to high raw material costs and weak demand, some nickel salt smelters plan to cut production or suspend operations. The overall upstream shipping sentiment also remains weak. Looking ahead, given the continued sluggish downstream demand and weak upstream shipping sentiment, nickel salt prices are expected to remain stable in the short term.

NPI:

During the week, the average price of SMM 8-12% high-grade NPI was 905.3 yuan/mtu (ex-factory, tax included), down 4.5 yuan/mtu WoW from the average price. The FOB index price of Indonesian NPI was USD 110.4/mtu, down USD 0.5/mtu WoW. The price of high-grade NPI continued to weaken during the week, but the decline began to narrow. Supply side, domestically, the CIF price of nickel ore from the Philippines dropped slightly, and the cost line of smelters' current ore supply loosened somewhat. However, domestic smelters are still in a stage of significant losses, with weak production drivers and low production volumes. In Indonesia, the domestic trade premium of saprolite ore weakened somewhat, but most smelters are still in a loss-making stage. Smelters have reduced their production loads, and with some convertible production lines already starting to produce high-grade nickel matte, there is an expectation of a decline in Indonesian NPI production. Demand side, stainless steel prices stabilized this week, and the futures market rebounded well. However, due to the continued low spot prices, stainless steel mills mainly engaged in just-in-time procurement, with procurement prices declining compared to the previous period. In summary, with stainless steel prices struggling to rise and raw material prices under pressure, the price of high-grade NPI may remain in the doldrums.

Stainless Steel:

Last week, the overall stainless steel spot market presented a stalemate and game-playing situation. Despite fluctuations in the SS futures market during the week, spot prices did not show significant adjustments and remained generally stable. Cold-rolled 201/2B coils in Wuxi and Foshan were both quoted at 7,500 yuan/mt; 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; cold-rolled 316L/2B coils were priced at 23,700 yuan/mt in Wuxi and 23,700 yuan/mt in Foshan; hot-rolled 316L/NO.1 coils were quoted at 23,200 yuan/mt in both Wuxi and Foshan; and cold-rolled 430/2B coils were both priced at 7,100 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. Although the news of steel mill production cuts in the early stage boosted market confidence, transaction volumes remain weak, mainly relying on traders offering discounted low-priced goods. Social inventory has risen again, up 1.31% WoW to 990,800 mt, with a slow de-stocking rate. In addition, the continued weakening of high-grade NPI prices has further weakened the cost support for stainless steel. In summary, the stainless steel market faces multiple pressures from large inventory, weak demand, and reduced cost support, and the repair of the supply-demand relationship will still take time.

Nickel Ore:

The price of nickel ore from the Philippines continues to weaken, with port arrivals expected to increase in Q3. Last week, nickel ore prices in the Philippines declined. The CIF price for Philippine red laterite nickel ore with 1.3% NI content shipped to China was $44-46/wmt, and the FOB price was $35-37/wmt. The CIF price for ore with 1.5% NI content 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 Philippines' main producing regions 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 port arrivals and sufficient supply. As of Friday, July 11th, nickel ore port inventory in China increased to 7.2 million wmt. Ships dispatched earlier have been arriving 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 significant 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, weekly ocean freight rates continued to rise. 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 peak periods 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, nickel ore prices in the Philippines are expected to continue to weaken. 2025 RKAB quota is 364 million tons, with nickel ore prices continuing to decline Nickel ore prices in Indonesia fell again this week. 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 for Indonesia's local laterite nickel ore with 1.6% NI content was $50.4-53.9/wmt, a decrease of $0.25 WoW, representing a 0.5% decline. In terms of limonite ore prices, the SMM delivery-to-factory price for Indonesia's local laterite nickel ore with 1.3% NI content 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, despite the continued tight supply of nickel ore in Indonesia due to 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 still be in the doldrums. Regarding limonite ore, from the supply side, the current supply of limonite ore remains relatively stable, meeting current market demand. In addition, significant progress in additional RKAB quotas may further drive an increase in supply. From the demand side, MHP project production is normal, with some MHP producers increasing production, leading to a steady and slight increase in overall demand. In the long term, with the progress of additional RKAB quota approvals, it is expected that limonite ore prices may have downside room