[SMM Analysis] Active Trading Amid Restocking for Real Demand Drives High-Grade NPI Prices Higher

The average price of SMM 10-12% high-grade NPI rose 21.17 yuan/mtu WoW to 915.17 yuan/mtu (ex-factory, tax included), while the average Indonesian NPI FOB index price increased $3.01/mtu WoW to $114.66/mtu. Nickel prices and stainless steel futures remained high this week, with bullish sentiment persisting, driving continuous increases in high-grade NPI prices.

Supply side, supported by macro tailwinds, the market is generally bullish, and upstream enterprises showed clear tendencies to hold back cargoes, leading to rising offers. Meanwhile, as year-end approaches, some smelters have entered production cuts and maintenance, reducing market supply to some extent. Demand side, after high-grade NPI prices entered an upward trend, traders actively purchased, and some downstream steel mills restocked for real demand, driving actual transaction prices of high-grade NPI higher and boosting market activity. Overall, with increased activity both upstream and downstream, transaction prices for high-grade NPI continue to rise, and further upside room is expected in the short term.

From the perspective of NPI conversion to high-grade nickel matte, refined nickel prices continued to rise this week, while high-grade NPI prices also increased WoW. The average discount of high-grade NPI to refined nickel widened to 389.33 yuan/mtu. Next week, both high-grade NPI and refined nickel average prices are expected to maintain their upward trend, with the discount of high-grade NPI to refined nickel likely to remain high, increasing the possibility of NPI conversion.

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 rebound this week. Raw material side, ore prices in Indonesia and the Philippines held steady, while auxiliary material prices continued to decline, leading to a slight decrease in high-grade NPI production costs. Meanwhile, the significant rise in high-grade NPI prices improved smelter profits, with profitability turning positive in some regions. Looking ahead to next week, raw material side, ore prices are expected to remain stable, auxiliary material prices are projected to continue falling, and production costs are likely to decrease further. At the same time, high-grade NPI prices are expected to maintain their upward trend, suggesting continued improvement in smelter profits.