[SMM Analysis] Downstream Purchasing Sentiment Remains Weak; Intermediate Product Payables Under Pressure

Downstream purchasing sentiment remained weak, and intermediate product payables were under pressure.

This week, the tight supply-demand pattern in the MHP market eased slightly, with nickel and cobalt payables trending lower. On the supply side, after the strait was reopened, some producers' MHP output recovered somewhat, though still below previous levels, and some traders recently released inventories to a certain extent, lifting market availability. On the demand side, mid-year nickel salt and cobalt salt prices exhibited weakness, mounting cost-related losses put significant pressure on salt producers, their acceptance of high-priced MHP was relatively low, weighing on MHP payables. With supply rising and demand weak, the MHP payables may pull back in the short term.

The high-grade nickel matte market also faced a weak supply-demand situation. Currently, high-grade nickel matte holds a clear economic advantage over MHP, but on the supply side, major suppliers have already signed long-term contracts, leaving limited available spot cargoes. On the demand side, constrained by downstream production line compatibility, actual consumption capacity is insufficient. Overall purchasing sentiment was weak, trading activity was low, and payables remained stable.

In the international sulfur market, geopolitical premiums are gradually being cleared, but supply-side disruptions intensified. The US-Iran agreement stipulates that the Strait of Hormuz be unblocked within 30 days, with resumption of navigation being a gradual process. Kazakhstan indefinitely suspended sulfur exports from June 27 (only allowing sales to Russia), Russia extended its export ban to the end of 2026, and together with Turkey's ban until end-September, near-term supply disruptions intensified. Sulfur prices are expected to be under pressure in the medium and long term, but supply recovery faces a time lag, keeping prices swinging wildly at highs.

As for nickel prices, this week nickel prices were mainly influenced by macro sentiment repair and their own weak fundamentals, moving sideways overall, and rebounding on Friday as Indonesia's nickel pig iron controls were implemented. Against a backdrop of lower MHP payables and stable high-grade nickel matte payables, MHP prices pulled back significantly as payables declined, while high-grade nickel matte edged lower. In addition, MHP cobalt prices and refined cobalt prices also declined. On the whole, the intermediate product market will be under pressure in the short term.