[Analysis] Upstream Holds High-Grade NPI Prices Firm, But Short-Term Fundamental Pressure Is Evident

The average price of high-grade NPI dropped by 4 yuan/mtu WoW to 881.3 yuan/mtu (ex-factory, tax included), while the Indonesian NPI FOB index price fell by $0.21/mtu WoW to $109.63/mtu.Entering December, as stainless steel and SHFE nickel futures prices rose, market sentiment recovered somewhat. At the same time, high-grade NPI smelters faced dual pressures from long-term contract negotiations and prices below cost lines, leading to clear efforts to hold prices firm. High-grade NPI prices gradually stabilized.

Cost side, with long-term contract negotiations approaching and cost-side losses intensifying, upstream smelters and traders held back cargoes and actively kept prices firm. During the week, some high-priced transactions occurred. Demand side, stainless steel enterprises planned production cuts in December, and procurement demand remained relatively weak, with low acceptance of high prices. Overall, upstream players actively supported prices, while downstream acceptance was low, and oversupply showed no improvement. Although high-grade NPI prices stabilized, the transaction center may rise slightly. However, in the short term, under fundamental pressures, significant upward resistance for high-grade NPI prices is expected.

From the perspective of NPI conversion to high-grade nickel matte, the average price of refined nickel increased this week, while high-grade NPI prices dropped slightly. The discount of high-grade NPI to refined nickel widened to 299 yuan/mt. High-grade NPI prices are expected to stabilize and rebound next week, with the discount to refined nickel likely holding steady. However, driven by the profit advantage of high-grade nickel matte, NPI conversion output is expected to maintain an upward trend.

Cost side, based on nickel ore prices from 25 days ago, high-grade NPI smelters’ cash costs saw a slight recovery in profits this week. Raw material side, Philippine and Indonesian ore prices held steady during the week, while auxiliary material prices declined slightly. Some enterprises improved their NPI grade, leading to a slight decrease in high-grade NPI production costs. Meanwhile, high-grade NPI prices stabilized and declined slowly, allowing smelters’ profit margins to recover modestly. Looking ahead to next week, raw material side, ore prices are expected to remain stable, and auxiliary material prices may continue to drop slightly. With production costs edging down, high-grade NPI prices have some room to rebound, and smelter profit margins are expected to improve.