Jul 8 Morning Call
Market Hot Topics:
The Excelsior Nickel Cobalt (ENC) HPAL project in Indonesia is expected to produce its first MHP in July and refined nickel in August, with an annual capacity of 72,000 mt nickel equivalent, further accelerating the expansion of Indonesia’s nickel downstream. The project's commissioning will boost long-term demand for limonite, but the growing increase in global Class 1 nickel supply may intensify the battery-grade nickel surplus, exerting downward pressure on MHP and nickel prices and squeezing profit margins along Indonesia’s nickel industry chain. Against the backdrop of market attention on additional RKAB quota approvals, the project further reinforces concerns over future nickel oversupply.
Indonesia's Ministry of Investment and Downstream said Australian battery materials processing technology company Pure Battery Technologies (PBT) plans to build a ternary cathode precursor project in Indonesia, producing based on domestic MHP, with an investment of $350 million.
Macro:
(1) Fed Governor Waller: Forward guidance is not a case of more being better, and can be completely omitted when necessary. Inflation risks have surpassed employment risks.
(2) US President Trump said regarding Ukraine that he is in discussions with Russian President Putin to see if the Russia-Ukraine conflict can be ended. Trump said they had a “very good call.”
Spot Market:
On Jul 7, SMM #1 refined nickel price rose 300 yuan/mt from the previous trading day. In terms of spot premiums, the average for Jinchuan #1 refined nickel was 2,300 yuan/mt, flat from the previous trading day, while the domestic mainstream brand electrodeposited nickel ranged from -400 to 400 yuan/mt.
Futures Market:
The most-traded SHFE nickel 2609 contract edged up slightly in early trading before pulling back, and as of the morning close, it stood at 126,290 yuan/mt, down 0.03%.
July falls within the window for Indonesia’s nickel ore RKAB submissions; the final approval outcome will determine the H2 supply-demand pattern and is currently the most critical uncertainty. In the near term, nickel prices are expected to be in the doldrums in the 125,000-135,000 yuan/mt range.
Nickel Sulphate
On Jul 7, the SMM battery-grade nickel sulphate average price edged lower.
Cost side, nickel prices have moved sideways, and under pressure from its own inventory and rate hike expectations, the spot production cost of nickel sulphate is consolidating at lows; supply side, the tight supply of intermediate products has not changed, with MHP payables and auxiliary material prices such as sulphuric acid staying high, and nickel salt smelters are keeping offer prices elevated, though some enterprises are also releasing low-cost inventories; demand side, given the sharp MoM decline in nickel prices and some downstream enterprises having accumulated certain inventories, downstream sentiment for building stocks is weak, resulting in relatively low acceptance of nickel salt prices. Today, the Willingness to Sell Sentiment Factor for upstream nickel salt smelters was 1.8, the purchase willingness sentiment factor for downstream precursor plants was 2.5, and the sentiment factor for integrated enterprises was 2.4 (historical data can be accessed through the database).
Looking ahead, the stockpiling period in July is expected to shift to the latter part of the month, and attention should be paid to the impact of nickel prices and intermediate products on cost support.
NPI
Jul 7 news, the SMM high-grade NPI market sentiment factor was 1.99, flat MoM. The upstream high-grade NPI sentiment factor was 2.25, flat MoM. The downstream high-grade NPI sentiment factor was 1.73, flat MoM. Trading in the high-grade NPI spot market was sluggish overall today. The traditional off-season for stainless steel continued to suppress downstream purchase willingness, and a strong wait-and-see sentiment prevailed among buyers and sellers, leading to minimal transactions. Market feedback indicated a two-way obstruction in current trading: on one hand, spot cargo circulating in the market was relatively scarce; on the other hand, downstream steel mills' procurement demand contracted due to the off-season, making it difficult to reach actual deals. In the short term, sideways futures are unlikely to drive a recovery in spot transactions, and the market may persist in a stalemate and wait-and-see pattern, with prices consolidating on a subdued note within a range.
Stainless Steel
According to SMM on Jul 7, SS futures overall maintained a consolidating performance on a strong note. Fundamentals have not seen significant changes, and driven by capital-side operations, SS continued the strong trend from the previous trading day. As of the close, the most-traded SS contract settled at 14,775 yuan/mt. In the spot market, although SS futures continued to show strong performance, spot fundamentals did not improve significantly: while spot offers were raised following the upward trend, after concentrated transactions for low-priced cargo were completed yesterday, market trading weakened again today, and market confidence in the outlook remained insufficient.
The most-traded SS futures contract. At 10:15 a.m., SS2608 was quoted at 14,790 yuan/mt, up 65 yuan/mt from the previous trading day. Spot premiums for 304/2B in the Wuxi area were in the range of 280-680 yuan/mt. In the spot market, the average price for cold-rolled 201/2B coil in Wuxi was flat; the average price for cold-rolled, uncut edge 304/2B coil rose by 50 yuan/mt in Wuxi, and the average price in Foshan rose by 50 yuan/mt; the price for cold-rolled 316L/2B coil in the Wuxi area was flat; offers for hot-rolled 316L/NO.1 coil in Wuxi were flat; and cold-rolled 430/2B coil prices in both Wuxi and Foshan were flat.
This week, the push and pull between macro and industrial logic dominated futures trends. US inflation data pulled back, and expectations for US Fed interest rate hikes further cooled, weakening the US dollar index. This overall boosted the valuation of commodities and non-ferrous metals, providing macro support for the metals sector. However, industrial-side sentiment remained persistently bearish. The unresolved issue of additional Indonesian nickel ore quotas fueled strong concerns over ample future nickel resource supply, keeping SHFE nickel trading in a low range without an effective rebound. Weighed down by nickel prices, SS futures remained in the doldrums overall, struggling to rise, but the key support around 14,500 yuan/mt was relatively strong; the futures did not break below this level, moving sideways throughout. On the spot and inventory side, mainstream steel mills continued to firmly hold prices, locking in the downside room for spot prices at the ex-works level. The market has now fully entered the traditional consumption off-season, with naturally weak end-use demand. Combined with persistently weak SS futures, overall market trading confidence was insufficient, and traders showed a strong willingness to reduce inventory through sell-offs. Downstream end-users maintained a heavy wait-and-see sentiment, primarily purchasing on an as-needed basis, and transactions on the floor remained sluggish. Supply-side news of maintenance and production cuts continued to ferment. Meanwhile, although the current round of social inventory halted its decline and rose slightly, the increase was limited, leaving overall inventory pressure still relatively low. These multiple factors jointly supported spot prices staying firm. On the cost and profit side, finished steel and raw material prices weakened in tandem this week, and the improvement in structural price spreads drove steel mill profits to expand WoW. During the week, the price centers of nickel-based raw materials and stainless steel finished products both shifted down, with the decline in the raw material side larger than the adjustment in the finished product side. Coupled with spot prices staying firm thanks to steel mills holding prices, profit margins on finished steel recovered. As a result, overall smelting profits at stainless steel mills expanded this week, and the industry’s profit environment improved marginally. Overall, the stainless steel market this week showed a dual pattern of macro support and industry suppression, with a clear divergence between weak futures and firm spot prices. Weak end-use demand in the off-season and sluggish transactions were the core fundamental bearish factors, while steel mills’ firm pricing, expectations of maintenance, and low inventory continued to underpin spot prices. The decline in raw material prices gave back profits and repaired steel mill profits, easing profit pressure on the production side. In the near term, the market will continue to trade around the US Fed’s policy expectations and the game over Indonesian nickel ore policies, with futures remaining in a sideways consolidation and the strong spot price pattern persisting. Going forward, key factors to track include US dollar index movements, the implementation of Indonesian nickel quotas, the strength of key support for SS futures, changes in downstream off-season rigid demand, and steel mill maintenance and commissioning progress.
Nickel Ore:
Philippine market:
CIF China offers fell overall this week, with 1.3% quoted at $45.5–47/wmt, 1.4% at $56–57/wmt, 1.5% at $64–65/wmt, and 1.8% at $91–94/wmt; CIF Indonesia offers were flat, with 1.3% at $45–46 and 1.4% at $55–56, basically aligned with smelter tender prices. Freight rates eased significantly this week: Surigao–Lianyungang was around $13.25/wmt, and Surigao–Indonesia was around $11/wmt, with overall freight down about $0.5/wmt WoW. The previous situation of “high freight rates” has clearly eased. FOB prices moved down in tandem, with 1.3% quoted at $32–35/wmt, 1.4% at $41.5–43.5/wmt, and 1.8% at $76–78/wmt, validating the earlier assessment that FOB would follow CIF’s pullback. Supply side, Zambales and the Northern Luzon production areas officially entered the rainy season, with deteriorating mine roads hindering shipments and leading to low outbound volumes. Weather aspect, the first five days of next week in the Philippines are expected to see continuous rainfall, with the last two days turning mainly to showers, and the weekly cumulative rainfall across the country surging overall; meanwhile, a low-pressure system is forming in the eastern waters, and although not expected to intensify into a tropical depression or tropical storm, it is forecast to land on the Philippines from the central-south next Monday and move northwestward over land, affecting the three major islands of Luzon, Visayas, and Mindanao. Among the key producing areas, the Manicani-Homonhon-Dinagat-Surigao belt’s next-week cumulative rainfall is expected to more than double from this week, with the Homonhon area expected to be affected by swells for 2–3 days; in Dinapigue, next week’s rainfall is expected to be about six times that of this week, with wave heights expected to reach around 1.7 meters on Wednesday and Thursday; at the loading points of RTN, Ipilan, and Berong in Palawan, next week’s rainfall is all expected to be further higher than this week; and in Zambales area, next week’s cumulative rainfall is expected to be about 2.5 times that of this week. Despite ongoing weather disturbances, Chinese port inventories have already been at high levels, limiting the weather’s price support. Cost side, international oil prices pulled back slightly, alleviating extraction and transportation cost pressures, but spot freight rates still remained at relatively high levels, and the loosening has yet to fully materialize. Demand side, smelters in both China and India held dual high inventories, with weak near-term replenishment appetite, the buyer-dominant landscape unchanged, and market transactions sluggish. In terms of inventory, as of June 26, the Philippine nickel ore inventory at Chinese ports was approximately 6.44 million wmt (about 51,000 mt in nickel metal content), extending the relaxed supply landscape.
Indonesia market:
Indonesia’s Ministry of Energy and Mineral Resources announced the HMA nickel benchmark price for the first issue of July at $17,225.67/dmt, a significant cut of about 7.6% from the $18,642.33/dmt in the second issue of June. Based on this calculation, the theoretical HPM price for Ni 1.6% saprolite ore is about $66.6/wmt, and for Ni 1.2% limonite ore is about $47.4/wmt. On the premium side, the premium for 1.6% grade remained stable, with 1.4% grade at about $1.3/wmt and 1.5% and 1.6% grades at about $3/wmt, showing limited fluctuations overall. In spot cargo transactions, 1.2% limonite ore was offered at about $30/wmt, and 1.5% saprolite ore at about $64.5/wmt, with both down about $5.5/wmt this week, mainly driven by the sharp pullback in the HMA benchmark price. Supply side, the impact of the rainy season in the Sulawesi mining area remained relatively mild in some regions, with limited overall effect on shipments. However, weather conditions in the Halmahera and Obi Island production areas were generally more severe, where persistent heavy rainfall and deteriorating sea conditions have already restricted production at some mines. Despite disruptions to shipments, overall inventory levels at smelters remained relatively ample, limiting the near-term impact on procurement pace. Meanwhile, smelters continued to demand increasingly higher-grade nickel ore. The supply of low-grade ore (1.3–1.4%) has been largely filled by shipments from the Philippines, and multiple smelters have shifted to actively seeking high-grade ore (≥1.45%). However, domestic supply of high-grade ore in Indonesia remained tight, with circulating grades concentrated in the 1.45–1.50% Ni range, intensifying procurement competition. Spot transaction prices for limonite ore (1.2%) held steady this week, with smelter procurement staying at low levels and a general unwillingness to transact at the theoretical HPM price. Discounts remained deep, and persistently low HPAL operating rates continued to suppress purchase prices. On the policy front, on Thursday, June 25, Tri Winarno, Director General of Minerals and Coal at the Ministry, clarified that the total 2026 nickel ore RKAB quota has not yet been finalized. The government is still reviewing corporate revision applications under the official assessment mechanism, with no specific figure determined. The focus is on evaluating actual industry demand rather than relaxing restrictions. The RKAB revision window officially opened on July 1 and will remain open until July 31. Mining enterprises have already begun preparations for their revision applications, intensively submitting materials for production quota adjustments. All adjustments are subject to comprehensive review.
![[SMM Nickel Intermediate Product Daily Review] On July 8, MHP, high-grade nickel matte nickel prices, and cobalt prices declined.](https://imgqn.smm.cn/usercenter/biBGl20251217171733.jpg)
![[SMM Nickel Sulphate Daily Review]July 8, Quiet Market at Beginning of Month, Nickel Salt Prices Declined.](https://imgqn.smm.cn/usercenter/fzwTi20251217171733.jpg)
