Stainless steel futures market stops falling and rebounds, SHFE nickel prices may further decline [SMM Nickel Morning Meeting Summary]

7.17 Morning Meeting Summary

(1) In June, the US overall CPI annual rate rose to 2.7%, the highest since February, in line with market expectations. The monthly rate was recorded at 0.3%, the highest since January, also in line with market expectations. The core CPI annual rate rose to 2.9%, the highest since February, falling short of the expected 3%, but slightly up from 2.8% in the previous month. The monthly rate was recorded at 0.2%, below the market expectation of 0.3%.

(2) On Tuesday local time, US President Trump announced that tariff letters would also be sent soon to some smaller countries, with tariffs expected to be set at "slightly above 10%" for these countries.
 

Refined Nickel:

Spot Market: Today, the SMM 1# refined nickel price was 120,800-123,400 yuan/mt, with an average price of 122,100 yuan/mt, up 1,700 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan #1 refined nickel was 1,900-2,100 yuan/mt, with an average premium of 2,000 yuan/mt, down 50 yuan/mt from the previous trading day. The spot premiums and discounts quotation range for electrodeposited nickel from domestic mainstream brands was -100-300 yuan/mt.

Futures Market: The most-traded SHFE nickel contract (2508) closed up 1.34% in the night session and continued its strength in the daytime session, hitting a high of 121,600 yuan/mt before pulling back. As of the midday session, SHFE nickel was quoted at 120,390 yuan/mt, up 0.78%. Macro factors dominate the direction, with a risk of downward movement in the price center. If tariffs are implemented or the US Fed delays interest rate cuts, SHFE nickel prices may fall 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 16, the SMM battery-grade nickel sulphate index price was 26,952 yuan/mt, with a quotation range for battery-grade nickel sulphate of 26,980-27,460 yuan/mt, and an average price unchanged from yesterday. Cost side: US tariffs and economic data have disrupted the market, with LME nickel prices rebounding slightly. The immediate cost of nickel salts is expected to remain in the doldrums. Supply side: Overall inventory levels at nickel salt smelters are low, with limited available finished products. Some producers are reluctant to budge on prices, but weak demand has led to fewer transactions. Demand side: Some producers have restocking needs recently, with procurement sentiment slightly improving WoW. However, as the procurement period has not yet arrived, overall buying enthusiasm in the market is low. Looking ahead, the supply of nickel sulphate may be tight relative to the procurement needs of precursor plants, and nickel salt prices are expected to rebound.

NPI:

On July 16, the SMM 8-12% high-grade NPI average price was 900 yuan/mtu (ex-factory, tax included), down 1.5 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 weakened slightly, and the cost line for smelters has loosened. However, most smelters are still experiencing losses, and some high-grade NPI is being converted to high-grade nickel matte, with 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 have weak just-in-time procurement sentiment. Today, market inquiry activity has declined. In summary, the short-term supply and demand for high-grade NPI have weakened, and prices may remain under pressure.

Stainless Steel:

On July 16, SMM reported that the SS futures market initially surged in the morning but then weakened and pulled back, continuing the weak and volatile trend from yesterday. In the spot market, influenced by the morning's surge in the futures market, spot quotations remained strong from yesterday but then began to weaken and pull back. Coupled with the already sluggish high-priced stainless steel transactions, spot quotations fell again. Currently, due to stainless steel mill production cuts, social inventory has not further increased, and the shipping pressure on stainless steel mills has also eased. However, downstream demand remains weak, and the spot market fundamentals are in a stalemate, significantly influenced by the futures market. In the short term, the market awaits guidance from macro policies.

In the futures market, the most-traded 2509 contract is in the doldrums. At 10:30 AM, SS2509 was quoted at 12,710 yuan/mt, up 10 yuan/mt from the previous trading day. The spot premiums and discounts for 304/2B in Wuxi were in the range of 110-310 yuan/mt. In the spot market, cold-rolled 201/2B rolls in Wuxi and Foshan were both quoted at 7,600 yuan/mt; cold-rolled uncut edge 304/2B rolls had an average price of 12,750 yuan/mt in Wuxi and Foshan; cold-rolled 316L/2B rolls were 23,700 yuan/mt in Wuxi and Foshan; hot-rolled 316L/NO.1 rolls were 23,200 yuan/mt in both locations; and cold-rolled 430/2B rolls were 7,100 yuan/mt in Wuxi and Foshan.

Despite the SS futures market stopping its fall and rebounding, with prices strengthening, the spot market fundamentals for stainless steel 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 the previous news of stainless steel mill production cuts boosted market confidence and improved the sluggish transaction situation, the inventory pressure on stainless steel remains large. Stainless steel mill in-plant inventory, front-end warehouses, and social inventory are all at relatively high levels. With slow inventory depletion during the consumption off-season, the repair process of the supply-demand relationship has been delayed. Influenced by expectations of stainless steel mill production cuts, the procurement price for high-grade NPI has further fallen, pushing down the cost support for stainless steel. In summary, the current stainless steel market faces multiple pressures of large 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 port arrivals expected to increase in Q3Last 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.