The procurement demand of precursor plants may be tight, and nickel salt prices are expected to rebound [SMM Nickel Morning Meeting Summary]

7.16 Morning Meeting Summary

(1) The National Bureau of Statistics (NBS) released data showing that China's GDP in the first half of the year was 66,053.6 billion yuan, representing a year-on-year (YoY) increase of 5.3% at constant prices. By industry, the added value of the primary industry was 3,117.2 billion yuan, up 3.7% YoY; the added value of the secondary industry was 23,905 billion yuan, up 5.3% YoY; and the added value of the tertiary industry was 39,031.4 billion yuan, up 5.5% YoY. By quarter, GDP in Q1 increased by 5.4% YoY, and in Q2 by 5.2% YoY. On a month-over-month (MoM) basis, GDP in Q2 increased by 1.1%.

(2) Trump: If Russia fails to reach an agreement on the Russia-Ukraine conflict within 50 days, a 100% secondary tariff will be imposed on Russia. US official: Trump means that if no agreement is reached within 50 days, in addition to imposing a 100% tariff on Russia, secondary sanctions will also be imposed on countries purchasing Russian oil.
 

Refined Nickel:

Spot Market: Today, the SMM 1# refined nickel price ranges from 119,200 to 121,600 yuan/mt, with an average price of 120,400 yuan/mt, down 1,350 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan #1 refined nickel is 2,000-2,100 yuan/mt, with an average premium of 2,050 yuan/mt, up 100 yuan/mt from the previous trading day. The spot premiums and discounts quotation range for electrodeposited nickel from domestic mainstream brands is -100-300 yuan/mt.

Futures Market: The most-traded SHFE nickel 2508 contract closed down 1.08% at 119,460 yuan/mt in the night session; it opened lower and continued to decline in the daytime session, closing at 118,940 yuan/mt by the midday session, down 1.52%, barely holding above the 119,000 yuan/mt threshold. Macro factors dominate the direction, with risks of a downward shift in the price center. If tariffs are imposed or the US Fed delays interest rate cuts, SHFE nickel prices may decline further. In the short term, nickel prices may continue to be in the doldrums, with a core range of 118,000-123,000 yuan/mt.

Nickel Sulphate:

On July 15, the SMM battery-grade nickel sulphate index price was 26,947 yuan/mt, with a quotation range for battery-grade nickel sulphate of 26,980-27,460 yuan/mt, and the average price declining slightly from yesterday. Cost side, macroeconomic uncertainties brought about by US tariffs persist, putting downward pressure on nickel prices and slightly weakening the immediate cost of nickel salts. Supply side, some producers have shown reluctance to budge on prices recently, but weak demand has led to fewer transactions. Overall inventory levels at nickel salt smelters are low, with limited available finished products. Demand side, some producers have recently engaged in restocking, but due to not yet reaching procurement periods, overall market buying enthusiasm is low. Looking ahead, the supply of nickel sulphate may be tight relative to the procurement demand of precursor plants, and nickel salt prices are expected to rebound.

Nickel Pig Iron (NPI):

On July 15, the SMM 8-12% high-grade NPI average price was 901.5 yuan/mtu (ex-factory, tax included), down 2 yuan/mtu from the previous working day. Supply side, domestically, smelters are experiencing deep losses, with NPI production running at low levels. In Indonesia, the premium for saprolite ore has slightly weakened, and the cost line for smelters has loosened, but most smelters are still experiencing losses, with some high-grade NPI being converted to high-grade nickel matte, leading to expectations of reduced production. Demand side, stainless steel has entered the consumption off-season, with social inventory still showing buildup. Stainless steel spot prices have not been boosted well, and steel mills' just-in-time procurement sentiment is weak, with market inquiry activity declining today. In summary, the short-term supply and demand for high-grade NPI are weakening, and prices may remain under pressure.

Stainless Steel:

On July 15, the SMM reported that the SS futures market showed a weak oscillating trend during the day, influenced by the decline in SHFE nickel. In the spot market, driven by the increase in steel mills' plate prices, market trade quotations have strengthened somewhat. Despite continued weak downstream demand and the adverse impact of futures market pullbacks on transactions, leading to unsatisfactory transaction volumes, low-priced supplies have largely disappeared. Currently, under the combined effects of stainless steel mill production cuts and the oversold rebound in the futures market, the previous market downturn has been somewhat alleviated. However, downstream demand has not fundamentally changed and remains in the off-season. Against the backdrop of market bullish and bearish factors, prices are unlikely to rebound significantly.

In the futures market, the most-traded 2509 contract is in a weak oscillating trend. At 10:30 AM, SS2509 was quoted at 12,700 yuan/mt, unchanged from the previous trading day. The spot premiums and discounts for 304/2B in Wuxi range from 170-370 yuan/mt. In the spot market, cold-rolled 201/2B coils in Wuxi and Foshan are both quoted at 7,600 yuan/mt; cold-rolled uncut edge 304/2B coils have an average price of 12,800 yuan/mt in Wuxi and 12,775 yuan/mt in Foshan; cold-rolled 316L/2B coils are priced at 23,700 yuan/mt in both Wuxi and Foshan; hot-rolled 316L/NO.1 coils are quoted at 23,200 yuan/mt in both locations; and cold-rolled 430/2B coils are priced at 7,100 yuan/mt in both Wuxi and Foshan.

Despite the oversold rebound and price strengthening in the SS futures market, the fundamentals of the stainless steel spot market have not significantly reversed. The current market is still in the traditional consumption off-season, with summer high temperatures further weakening some downstream demand. Although previous news of stainless steel mill production cuts has boosted market confidence and somewhat improved the sluggish transaction situation, stainless steel inventory pressure remains high. In-plant inventory, front-end warehouse inventory, and social inventory at stainless steel mills are all at relatively high levels, with slow inventory depletion during the consumption off-season, delaying the repair process of the supply-demand relationship. Influenced by expectations of stainless steel mill production cuts, the procurement price of high-grade NPI has further declined, pushing down the cost support for stainless steel. In summary, the current stainless steel market faces multiple pressures of high inventory, weak demand, and weakened cost support, and the repair of the supply-demand relationship still requires time.

Nickel Ore:

Philippine nickel ore prices continue to be weak, with Q3 port arrivals expected to increaseLast 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.