[SMM Analysis] Mainstream Steel Mills' Tender Prices Plunge, High-Grade NPI Prices Remain Under Pressure

The average price of SMM 10-12% high-grade NPI fell 12.8 yuan/mtu WoW to 896.8 yuan/mtu (ex-factory, tax included). The average Indonesian NPI FOB index price dropped $1.49/mtu WoW to $110.88/mtu. End-use consumption remained sluggish during the traditional off-season. High-grade NPI prices hit a record low during the week, while several mainstream steel mills issued tender prices and concluded deals for tens of thousands of metric tons, driving prices even lower.

Supply side, high-grade NPI prices continued to decline, and upstream smelters still refrained from offering spot orders. Current prices have pushed some Indonesian NPI smelters into losses, resulting in low willingness to sell. Demand side, several mainstream stainless steel mills issued tender prices and procured tens of thousands of metric tons during the week, which spurred a rebound in downstream inquiries, but overall transaction volume remained low. The supply-demand imbalance deepened, and the oversupply situation persisted. Next week, downstream demand is expected to remain relatively weak while supply remains stable, and high-grade NPI prices are forecast to remain under some pressure.

Both the average refined nickel price and high-grade NPI prices declined this week. The discount of high-grade NPI to refined nickel narrowed to 259 yuan/mt. High-grade NPI prices are expected to remain under pressure next week, and refined nickel prices are also projected to continue their downward trend. The discount of high-grade NPI to refined nickel is likely to hold steady, and the volume of high-grade NPI converted to high-grade nickel matte is expected to remain stable MoM.

Based on the cash cost of high-grade NPI calculated using nickel ore prices from 25 days ago, smelter profits for high-grade NPI continued to decline this week. Raw material side, ore prices from the Philippines and Indonesia fell. Although auxiliary material prices continued to rise, the production cost for high-grade NPI decreased MoM. However, as high-grade NPI prices kept falling, smelter profit margins remained under pressure. Looking ahead to next week, raw material side, ore prices are expected to hold steady. With production costs likely to remain flat, high-grade NPI prices are anticipated to face continued pressure, and smelter profit margins are also forecast to be further weighed down.