The supply of low-priced stainless steel is gradually decreasing, and it will still take some time for the supply-demand relationship to recover [SMM Nickel Morning Meeting Summary]

7.15 Morning Meeting Summary

(1) US Fed ① US Fed's Goolsbee: The latest tariff threats may delay interest rate cuts. ② US Fed responds to White House "accusations": The rising cost of building renovations partly reflects unforeseen construction conditions. ③ "Fed Whisperer": The building renovation dispute poses another challenge to the Fed's independence, and no interest rate cut is expected this month. ④ Hassett: Whether Trump fires Powell or not, the Fed's response to headquarters renovations is crucial.

(2) On July 11, 2025, Wang Yi, Member of the Political Bureau of the CPC Central Committee and Foreign Minister, met with US Secretary of State Rubio in Kuala Lumpur. The two sides exchanged views on China-US relations and issues of mutual concern. Wang Yi comprehensively elaborated on China's principled position on developing China-US relations, emphasizing that both sides should translate the important consensus reached by the heads of state of the two countries into specific policies and actions. It is hoped that the US will view China with an objective, rational, and pragmatic attitude, formulate its China policy with the goal of peaceful coexistence and win-win cooperation, and engage with China on an equal, respectful, and mutually beneficial basis to jointly find the right way for China-US relations in the new era.

Refined Nickel:

Spot Market: Today, the SMM 1# refined nickel price ranges from 120,600 to 122,900 yuan/mt, with an average price of 121,750 yuan/mt, down 400 yuan/mt from the previous trading day. The mainstream spot premiums for Jinchuan #1 refined nickel range from 1,900 to 2,000 yuan/mt, with an average premium of 1,950 yuan/mt, down 50 yuan/mt from the previous trading day. The spot premiums and discounts for electrodeposited nickel from mainstream domestic brands range from -100 to 300 yuan/mt.

Futures Market: The most-traded SHFE nickel contract (2508) closed down 0.5% at 120,590 yuan/mt in the night session, gradually strengthened during the daytime session, reaching a high of 121,280 yuan/mt. As of the midday session, SHFE nickel was quoted at 120,970 yuan/mt, down 0.18%. Recently, the domestic concept of "anti-rat race" competition has boosted the commodity market, offsetting external negative factors, and nickel prices have rebounded in tandem. Looking ahead, the external macro environment remains uncertain, and nickel prices are expected to maintain a fluctuating trend within a range of 118,000 to 123,000 yuan/mt.

Nickel Sulphate:

On July 14, the SMM battery-grade nickel sulphate index price was 27,229 yuan/mt, with a quotation range for battery-grade nickel sulphate of 27,200 to 27,640 yuan/mt, and an average price unchanged from last Friday. Cost side, nickel prices are under pressure, and the immediate cost of nickel salts has slightly weakened. Supply side, some producers have recently shown reluctance to budge on prices, but weak demand has led to fewer transactions, and overall inventory and production schedules at nickel salt smelters remain low. Demand side, although some producers have recently restocked, the overall market buying enthusiasm remains low as the procurement period has not yet arrived. Looking ahead, production costs pulled back while downstream demand remained weak. Although nickel salt smelters refused to budge on prices, nickel salt prices are expected to remain at low levels in the short term.

NPI:

On July 14, the SMM average price of 8-12% high-grade NPI stood at 903.5 yuan/mtu (ex-factory, tax included), down 0.5 yuan/mtu from the previous trading day. Supply side, domestic smelters faced deep losses, keeping NPI production at low levels. In Indonesia, saprolite ore premiums weakened slightly, loosening smelters' cost lines. However, most smelters still operated at losses, with some high-grade NPI being diverted to high-grade nickel matte production, which may lead to output reductions. Demand side, stainless steel entered the off-season, with social inventory still building up. Stainless steel spot prices lacked upward momentum, and steel mills showed weak sentiment for just-in-time procurement. Market inquiries declined today. Overall, high-grade NPI supply and demand weakened in the short term, keeping prices under pressure.

Stainless Steel:

On July 14, SS futures opened lower but rose during the day, holding up well overall. In the spot market, steel mills raised 316L list prices by 200 yuan in the morning while keeping 304 prices unchanged. Affected by last week's futures pullback, spot market transactions remained sluggish, with traders largely maintaining their offers. In the afternoon, steel mills updated 304 stainless steel list prices, raising them by 100 yuan/mt. As futures strengthened in the afternoon, market activity improved, with offers rising and low-priced supplies gradually disappearing. The spot market was notably driven by electronic trading, with some transactions being arbitrage operations by traders rather than flowing to end-use consumption. Actual demand recovery still requires time.

Futures side, the most-traded contract 2508 strengthened. At 10:30 am, SS2508 was quoted at 12,700 yuan/mt, down 55 yuan/mt from the previous trading day. In Wuxi, 304/2B spot premiums/discounts ranged between 120-320 yuan/mt. In the spot market, cold-rolled 201/2B coils in Wuxi and Foshan were both quoted at 7,550 yuan/mt; cold-rolled 304/2B coils with uncut edges averaged 12,750 yuan/mt in both cities; cold-rolled 316L/2B coils in Wuxi and Foshan were quoted at 23,700 yuan/mt; hot-rolled 316L/NO.1 coils in both cities were quoted at 23,200 yuan/mt; cold-rolled 430/2B coils in Wuxi and Foshan were both quoted at 7,100 yuan/mt.

Although SS futures stopped falling and rebounded, the fundamentals of stainless steel spot market had not significantly reversed. The market remained in the traditional consumption off-season, with summer heat further weakening some downstream demand. Earlier news of steel mill production cuts boosted market confidence and improved sluggish transactions, but stainless steel inventory pressure remained high. Steel mill in-plant inventories, front warehouses, and social inventories all stood at relatively high levels, with slow destocking during the off-season delaying the recovery of the supply-demand relationship. Affected by expectations for steel mill production cuts, high-grade NPI procurement prices further declined, weakening cost support for stainless steel. In summary, the stainless steel market faces multiple pressures including high inventories, weak demand, and weakening cost support, and the recovery of the supply-demand relationship will take time.

Nickel Ore:

Philippine nickel ore prices continued 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 arriving in 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. Supply and demand side, 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, China's nickel ore port inventory 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 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, prices 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 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, Philippine nickel ore prices are expected to continue weakening.

Due to the impact of an exceptionally long rainy season and policy factors, Indonesia's nickel ore production in the first half of 2025 only reached 120 million tons. 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 this week. The delivery-to-factory price for SMM's Indonesia's local laterite nickel ore with 1.6% NI content was $50.4-53.9/wmt, down $0.25 WoW, with a decline of 0.5%. In terms of limonite ore prices, the delivery-to-factory price for SMM's Indonesia's local laterite nickel ore with 1.3% NI content remained stable at $26-28/wmt, unchanged from last week. For saprolite ore, supply side, Meidy Katrin Lengkey, Secretary General of APNI (Indonesia Nickel Association), revealed in an interview with CNBC Indonesia that the approved quota for nickel ore RKAB in 2025 was as high as 364 million tons, while the actual production was only 120 million tons. On the demand side, downstream smelters are still in the loss-making stage, with weak production drivers and relatively 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, the acceptance of high-priced nickel ore is limited. Looking ahead, the price of saprolite ore 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. In addition, significant progress in additional RKAB quotas may further drive an increase in supply. On the demand side, MHP project production is normal, with some MHP producers increasing production, leading to a steady and slightly increasing overall demand. In the long term, with the progress of additional RKAB quota approvals, it is expected that there may be downside room for limonite ore prices.