[SMM Nickel Morning Brief] Central Bank conducted a 500 billion yuan one-year MLF operation, and the most-traded SHFE nickel contract plunged in the night session.

7.27 Morning Meeting Minutes

Market Hotspots:

On July 22, 2026, the HPAL (High Pressure Acid Leach) project in the Sambalagi area of Morowali, Central Sulawesi, Indonesia, reached a key milestone with the arrival of a critical autoclave, marking an important phase in construction. The project is designed to produce approximately 90,000 mt Ni of mixed hydroxide precipitate (MHP) per year, with ore sourced from the Bahodopi mine. It consists of three production lines, with the first line targeted for mechanical completion by the end of 2026. The project is jointly developed by PT Vale Indonesia Tbk with partners GEM Co., Ltd. (China) and EcoPro (South Korea) through the joint venture PT BNSI. It is a national strategic project and part of the Indonesia Growth Project (IGP) Morowali, aimed at promoting nickel downstream processing and EV battery supply chain development.

Macro:

(1) The PBOC announced that, to keep banking system liquidity ample, it conducted 500 billion yuan of MLF operations on July 24, 2026, with fixed quantity, interest rate bidding, and multiple-price bidding methods, for a tenor of one year.

(2) US President Trump said on the 23rd that he is “seriously considering” restarting large-scale combat operations against Iran.

Spot Market:

On July 24, the average price of SMM #1 refined nickel was 132,350 yuan/mt, down 200 yuan/mt from the previous trading day. In terms of spot premiums, Jinchuan #1 refined nickel averaged 1,450 yuan/mt, flat from the previous trading day, while domestic mainstream brand electrodeposited nickel ranged from -300 to 500 yuan/mt.

Futures Market:

The most-traded SHFE nickel 2609 contract plunged in the night session, then recovered slightly to 132,610 yuan/mt by the morning close, up 0.2%.

Recent nickel inventory destocking has supported a rebound in nickel prices; meanwhile, the US-Iran conflict and evolving situation in the Strait of Hormuz have again triggered concerns over sulphur supply disruptions, keeping nickel prices firm in the short term.

Nickel Sulphate

As of this Friday, the average price of SMM battery-grade nickel sulphate rebounded slightly.

Demand side, it is mid-month, and downstream enterprises still hold raw material inventories, showing weak stockpiling sentiment and relatively low acceptance of nickel salt prices. Supply side, current MHP payables and auxiliary material prices remain high, and some producers hold expectations for production cuts; combined with gradually stabilizing nickel prices, enterprises have the willingness to raise their quotes. Looking ahead, the market is expected to continue destocking overall this month, and nickel sulphate prices will mainly focus on the cost support from nickel prices.

Inventory-wise, this week, the upstream nickel salt smelter inventory index fell from 9.3 days to 8.9 days, the downstream precursor plant inventory index dropped from 10.6 days to 9.2 days, and the integrated enterprise inventory index slid from 8.1 days to 7.6 days; in terms of buying and selling strength, this week, the upstream nickel salt smelter’s Willingness to Sell Sentiment Factor stayed at 1.8, the downstream precursor plant’s procurement sentiment factor remained at 2.5, and the integrated enterprise sentiment factor increased from 2.4 to 2.5.(Historical data can be accessed via the database)

Cost side, MHP raw material supply improved slightly, and coupled with weak acceptance from downstream salt plants, MHP payables remained soft this week. On the nickel price front, nickel prices rebounded this week, supported by destocking and technical factors, consolidating on a strong note overall. Taking the whole week into account, nickel prices strengthened, MHP payables were weak, and spot production costs for nickel salts rose WoW.

NPI

The SMM 10-12% high-grade NPI average price slipped 2.2 yuan/nickel unit WoW to 1,127.2 yuan/nickel unit (ex-factory, tax included), and the Indonesia NPI FOB index average price edged down $0.42/nickel unit WoW to $145.34/nickel unit. This week, the high-grade NPI spot market remained in a deep tug-of-war between supply and demand, with a persistent significant gap between the psychological price levels of upstream and downstream players. Spot transactions stayed sluggish overall, with only a handful of scattered deals finalized and very scarce bulk fixed-price trades. Demand side, constrained by the traditional stainless steel off-season, steel mills aggressively pushed for lower prices, with most buyers sticking to low-price procurement targets. Adding to this, the market broadly held bearish expectations for the August market, and some mills had sufficient raw material inventories earlier on, resulting in weak active buying interest. Although inquiries picked up occasionally, actual purchasing was cautious. Meanwhile, inquiries and negotiations for September forward cargoes continued to heat up, and forward stockpiling gradually got underway, but most remained at the negotiation stage or floating-price quotations, without large-scale orders being formed yet. Supply side, leading suppliers showed a strong willingness to hold prices firm, with a psychological floor for fixed-price offers and little incentive to actively cut prices to move material. Some sellers adopted a strong wait-and-see stance or chose to hold back from selling in the near term and suspended offering on expectations of better forward market conditions. Overall, sluggish end-use demand during the off-season and market pessimism over the next month continued to weigh on prices, while tight spot circulation and some sellers’ reluctance to sell limited deep price declines. With long and short forces counterbalancing each other, matching spot transactions remained persistently difficult, and trading focus gradually shifted toward forward contracts. Nickel pig iron is expected to stay in a range-bound stalemate in the short term.

Stainless Steel

This week, the stainless steel spot market was supported by macro sentiment and expectations of tightening nickel ore supply, with futures consolidating on a strong note overall. However, the rigid constraint of the traditional consumption off-season limited spot price upside room. Early in the week, futures strength boosted market confidence, lifting inquiry activity and leading to a phased recovery in transactions. As futures pulled back, trading sentiment turned cautious in the latter half of the week, and transactions weakened, dominated by just-in-time procurement only. Spot offers were largely stable, with limited price fluctuation range. On the inventory front, after the typhoon impact faded, previously delayed cargoes arrived at ports and entered warehouses in a concentrated manner, and combined with normal mill allocations, stainless steel social inventory stopped falling and built up slightly, with off-season inventory buildup pressure re-emerging. Cost and profit sides, high-grade NPI prices remained stable, while stainless steel scrap edged up in tandem with finished products. Finished product prices and raw material costs moved slightly higher in sync, and smelting profits at steel mills remained largely steady. Overall, the market this week exhibited a tug-of-war pattern—supported from the bottom yet lacking upward momentum—with tight nickel ore expectations underpinning the industry floor, while sluggish off-season rigid demand and limited acceptance of high prices left the spot market without sustained upward impetus.

This week, stainless steel finished products and costs edged up in tandem, with steel mill smelting profits remaining largely stable. Profit margins for 304 cold-rolled from current and inventory raw materials stood at 2.15% and 1.11%, respectively. On the nickel raw materials side, affected by weak off-season demand and cautious purchasing by steel mills, high-grade NPI prices remained steady. The cost-and-freight inclusive price for Indonesian high-grade NPI arriving at Chinese ports was reported at 1,132.5 yuan per nickel unit. Stainless steel scrap edged up, driven by stronger futures, with Shanghai 304 off-cuts quoted at 10,450 yuan/mt. However, constrained by sluggish off-season demand and shrinking substitution advantages, upside room was limited, and the market is expected to remain range-bound with a steady bias in the short term. On the chrome raw materials side, spot high-carbon ferrochrome prices held steady, with mainstream quotations in Inner Mongolia at 8,075 yuan/mt (50% metal content). Although supply is ample and off-season demand is pulling back, spot prices have yet to show abnormal movements, as high-cost chrome ore arrivals and the market’s wait-and-see stance ahead of steel mill tenders lent support. With mainstream steel mills lowering August tender prices for high-carbon ferrochrome by 200 yuan/mt (50% metal content) MoM, subsequent spot prices are likely to gradually converge toward the tender level.

Nickel ore:

Philippine market:

In terms of price, Philippine nickel ore prices remained largely stable this week. CIF China quotes for Ni 1.3%, 1.4%, and 1.5% ores were around $46/wmt, $56.50/wmt, and $64.50/wmt, respectively, flat from the previous week. However, ocean freight rates rose notably, with rates from Surigao to Lianyungang and Ningde ports up by $0.75/wmt each, and the Surigao to IWIP route posting the largest increase of $1.00/wmt. The rise in freight was mainly driven by higher international oil prices and adjustments in ferroalloy prices, but ample downstream inventories and cautious purchasing have yet to push ore prices higher.

On the weather front, conditions in major Philippine mining areas are expected to be generally stable over the coming week. Zambales is forecast to see heavier rainfall from July 22 to 24, which may briefly disrupt mine and port operations. Surigao will mainly experience intermittent light to moderate rain, with limited impact on production and shipments. Overall, it is not expected to significantly affect the country’s nickel ore supply.

On the supply-demand and market sentiment front, the Philippine market maintained a pattern of increasing supply and weak demand. Mines continued to ramp up production, with ample spot supply, while downstream purchasing remained focused on medium-to-high-grade ores, leading to continued accumulation of low-grade ore inventories and sluggish trading. Due to the increase in inventories, some mines have moderately lowered their quotes for low-grade ore, and the market as a whole is dominated by a strong wait-and-see sentiment.

Market outlook, the nickel ore supply from the Philippines is expected to remain ample in the coming week, with downstream purchases mainly based on rigid demand. Demand for high-grade ore is relatively stable, while low-grade ore prices will continue to face downward pressure due to ample supply and inventory accumulation.

Indonesia Market:

Price-wise, as Indonesia's HMA and HPM for the second half of July officially took effect on July 15, domestic nickel ore prices were adjusted downward accordingly. Currently, Ni 1.2% limonite ore CIF is around $29/wmt, Ni 1.3% around $31/wmt; Ni 1.4%, 1.5%, and 1.6% saprolite ore CIF are around $54.9, $61.2, and $66.1/wmt respectively. Affected by the HPM cut, transaction prices pulled back about $0.5/wmt WoW, and transactions are now largely executed based on the new HPM. Against the backdrop of ample supply and high smelter inventories, ore prices are expected to remain in the doldrums in the short term.

Weather side, in the coming week (July 20-26), major mining areas including Morowali, Kolaka, Konawe, and Weda will see intermittent light to moderate rain, with localized thunderstorms, but overall rainfall will be scattered and will not significantly affect mine production, transportation, or port loading.

Supply-demand and market sentiment side, Indonesia's domestic nickel ore market as a whole maintains a pattern of ample supply. Inventories at RKEF and HPAL smelters can support about 2–3 months of production, and downstream purchases remain mainly for rigid demand, with no significant restocking intention for now. Mine production and shipping are normal, saprolite ore supply is ample, and the successive commissioning of new HPAL projects has further eased supply concerns. Limonite ore transaction prices are around $33–35/wmt, small and medium-sized mines hold back from selling, and actual transactions remain concentrated among large mines. Some smelters have raised their purchase grade to Ni 1.45%–1.50%, further dampening demand for low-grade ore. Most mines still hope to achieve transaction prices $3–5/wmt above the HPM, buyers and sellers continue to engage in a tug-of-war, and market trading is thin.

Policy side, the market continues to monitor the progress of RKAB additional quota approvals and export policies. Indonesia plans to fully implement a single export management system for strategic minerals on September 1, 2026. Currently, the nickel industry chain has not been included in the regulatory scope, with limited short-term impact. Furthermore, according to Government Regulation No. 21 of 2026, Indonesia exempts China, the US, Australia, and Canada from stricter DHE SDA foreign exchange retention requirements, which helps reduce the capital costs of export enterprises but is expected to have no significant impact on nickel ore supply and demand and prices.

Market Outlook: The supply-demand pattern of the Indonesian nickel ore market is expected to remain stable in the coming week, with ample supply and procurement still mainly driven by rigid demand; prices are anticipated to stay steady. As the deadline for RKAB supplementary quota approval approaches, the market will continue to monitor the impact of the approval results on subsequent supply and price trends.