[SMM Analysis] Nickel Ore Prices Held Steady Overall This Week, Rainy Season Commenced in Surigao, Philippines

In Q4, the main nickel ore producing areas in the Philippines entered the rainy season, with both mining and shipments dropping to low levels.

Philippine nickel ore prices were flat this week. Price-wise, the CIF offers from the Philippines to China were: $42-44/wmt for ore with a 1.3% Ni grade, $50-52/wmt for a 1.4% Ni grade, and $57-59/wmt for a 1.5% Ni grade; the average price from the Philippines to Indonesia was $43/wmt for a 1.3% grade and $50/wmt for a 1.4% grade. Supply side, a low-pressure system formed in the western waters of Surigao this week, with cumulative rainfall in North Surigao-Dinagat Islands expected to exceed 200 mm, while rainfall in South Surigao, Honmohon, Manicani, and other areas is also expected to reach over 100 mm. As Surigao officially enters the rainy season, mining and shipments will decrease significantly. In terms of vessel dispatch data, as of the beginning of this week, 126 vessels were confirmed for October, and 17 for November, with the total number of vessels increasing by only 10 MoM. Vessel dispatches from South Surigao have stopped, and exports are expected to further decrease in November-December. Regarding port inventories, as of October 31, nickel ore inventory at Chinese ports was 10.06 million mt, down 180,000 mt MoM, equivalent to a metal content of approximately 79,000 mt Ni. Demand side, NPI prices continued to decline this week, exacerbating losses for smelters and limiting their acceptance of high-priced nickel ore. The ocean freight rate from the Philippines to Lianyungang averaged $11.5/mt, remaining stable. Looking ahead, domestic smelters completed their nickel ore stockpiling in September-October and are expected to primarily consume their own inventories in November-December against a backdrop of weakening end-use demand, with market trading volume shrinking significantly and prices expected to remain stable.

Indonesian nickel ore prices were generally stable recently, with demand from some smelters increasing.

Indonesian nickel ore prices edged down this week. For the benchmark price, the domestic Indonesian nickel ore benchmark for the second half of October was $15,075/dmt, down 0.44% from the previous period. Regarding premiums, according to SMM's premium data for Indonesia's local laterite nickel ore, the average premium for the 1.4% grade was $22, for the 1.5% grade was $25.5, and for the 1.6% grade was $26, unchanged from last week. SMM's delivery-to-factory price for Indonesia's local laterite nickel ore with a 1.6% grade was $51.7-53.7/wmt, down $0.1 from last week. For limonite ore prices, SMM's delivery-to-factory price for Indonesia's local laterite nickel ore with a 1.3% grade held steady at $24-26/wmt, unchanged from last week.

For saprolite ore, scattered rains occurred in some parts of Sulawesi, while Halmahera Island remained in the dry season. Overall, mining operations were not significantly affected. On the production side, to make up for delays in previous months, mines are ramping up production, leading to continued growth in nickel ore output. However, the ongoing review by the Forestry Working Group continues to cause minor disruptions to current shipments. Demand side, some Indonesian smelters continue to procure nickel ore to meet next year's RKAB approval requirements and ensure inventory for early next year. According to the SMM Indonesian saprolite ore inventory cycle index, the average inventory of pyrometallurgy smelters in October increased compared to September, averaging 2.9 months. It is expected that some other small smelters will generate new demand in the near term. Overall, the premium for saprolite ore is expected to remain flat, with limited downside room.

Limonite ore side, supply side, the market performance is relatively stable, and overall production remains steady. Demand side, smelters' nickel ore procurement volume may see a slight increase, but their inventory levels remain relatively ample currently. According to the SMM Indonesian limonite ore inventory cycle index, the average inventory of pyrometallurgy smelters in October increased compared to September, averaging 1.8 months. With the new RKAB quotas and the review by the Forestry Working Group, limonite ore prices are expected to remain flat in the short term.