[SMM Analysis] Nickel Intermediate Product Supply-Demand Tightened and Costs Rose This Week

The MHP market is characterized by tight supply. Spot cargo availability is limited, with few buyer offers. Demand side, performance is robust, particularly influenced by the DRC's cobalt intermediate products export quota policy, which has elevated the importance of MHP as a supplementary raw material, with its cobalt payables receiving significant support. Under these circumstances, nickel payables remained high this week, while cobalt payables continued to climb.

Although tight MHP supply has enhanced the substitutability of high-grade nickel matte as an alternative raw material, overall transactions were sluggish due to insufficient spot availability in the high-grade nickel matte market.

Cost side, sulfur prices, as a key auxiliary material, continued to rise. Supply side, reductions were notable, with Russia imposing a temporary ban on exports of certain sulfur categories, while production cuts occurred at refineries in Qatar and Kazakhstan. Demand side, supply tightness was exacerbated by the release of stocking demand from Indonesian MHP projects. Against the backdrop of spot resource shortages, market focus has shifted to the sulfur market's trajectory following the pullback in winter phosphate fertiliser demand. Sulfur prices are expected to have further upside potential.

Nickel prices side, "hawkish" monetary policy expectations bolstered the US dollar, while the meeting between the Chinese and US heads of state released positive signals, alleviating market concerns about escalating trade friction, leading to a WoW pullback in LME nickel prices this week. Considering coefficients, nickel prices for both MHP and high-grade nickel matte declined in sync this week, whereas MHP cobalt prices maintained a sharply rising trend.