[SMM Weekly Review of Nickel Ore Market] Philippine nickel ore prices continue to decline. Will Indonesia's RKAB approval return to once-a-year basis?

Philippine nickel ore prices continue to decline this week, with downstream smelters' profits improving slightly

This week, Philippine nickel ore prices continued to fall. The CIF prices of Philippine laterite nickel ore (NI1.3%) arriving in China were $41-43/wmt, those of NI1.4% were $49-51/wmt, and those of NI1.5% were $56-58/wmt. From the supply and demand perspective, scattered rainfall occurred across the Philippines this week, but overall weather and sea conditions were better than last week. The weather improved significantly in the north. The southern regions of Tawi-tawi, East Davao, and Zamboanga experienced more rainfall than other nickel ore-producing areas, but the cumulative weekly precipitation did not exceed 40mm, and production remained generally stable. It is expected that in Q3, the impact of precipitation on the main producing areas will be limited, shipments will remain at a high level, ore port arrivals will continue to increase, and supply will be sufficient. On the demand side, NPI prices continued to rise slightly this week. The market sentiment was positive amid expectations of the "September-October peak season". Although Philippine nickel ore prices have declined recently, domestic NPI smelters still face losses. It is expected that the overall operating rate in China will increase slightly in August but remain at a low level. Regarding ocean freight rates, they have fallen slightly recently, with the average ocean freight rate from the Philippines to Tianjin Port being $12/mt. It is expected that in the short term, although ocean freight rates are projected to decline slightly as shipments enter the peak season, they will still remain high. 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 may remain in the doldrums in the short term.

Will RKAB approvals revert to annual approvals? Rainy season eases in some parts of Indonesia

Indonesian nickel ore prices remained stable with a slight increase this week. In terms of benchmark prices, the benchmark price of Indonesia's local laterite nickel ore rose steadily to $15,208/dmt, with a growth rate of 0.69%. In terms of premiums, the mainstream premium for Indonesia's local laterite nickel ore remained stable at $24-26/wmt this week. The SMM delivery-to-factory price of Indonesia's local 1.6% laterite nickel ore was $50.6-53.9/wmt, an increase of $0.2 from the previous week. Regarding limonite ore prices, the SMM delivery-to-factory price of Indonesia's local 1.3% laterite nickel ore remained stable at $26-27.5/wmt, unchanged from the previous week.

For saprolite ore, from the supply side, there was almost no rainfall in the Sulawesi region this week, while rainfall continued in some parts of the Halmahera region, leading to a slight improvement in mining and transportation conditions. Nickel ore production and supply may have rebounded. On the demand side, the profit margins of Indonesian smelters are improving marginally, although the situation of cost losses still exists. In terms of quotas, the Ministry of Energy and Mineral Resources (ESDM) plans to shorten the mining quota period from the current three years to one year, which will require mines to reapply for RKAB quotas in October. Therefore, regarding the current prices, smelters and mines maintain a wait-and-see attitude. This week, some NPI smelters in Indonesia have raised their marginal ore grades from 1.45 to 1.5, which will impose stricter requirements on nickel ore grades. Consequently, it is expected to produce a larger quantity of NPI with the same amount of nickel ore used. Overall, given the continuous losses of smelters and the gradual progress of Indonesia's RKAB supplementary quotas, there is still downside room for saprolite nickel ore prices.

On the limonite ore side, the supply side shows a slight surplus. The progress of RKAB quotas may increase the limonite ore production of mines. The supply from some HPAL smelters does not show signs of shortage. Demand side, the demand from Indonesia's smelters this week has not shown significant growth. In the short term, the new limonite projects in Indonesia that are about to commence production have not yet started purchasing nickel ore, and the smelters' inventories remain relatively stable. Looking ahead, as most of the 2025 RKAB quotas are gradually approved, limonite ore prices are more likely to fall than rise.