[SMM Nickel Morning Meeting Minutes] US July PPI Was Mild, the Most-Traded SHFE Nickel Contract Plunged Sharply in Early Trading

8.17 Morning Meeting Minutes

Market Hot Topic:

Indonesia Nickel Miners Association (APNI) recommended keeping the 2026 nickel ore RKAB at 270 million wmt and additionally setting a 30 million mt strategic buffer, meaning the potential total quota could reach 300 million wmt. APNI said this was intended to address rising raw material demand driven by the continued expansion of Indonesia’s nickel smelting capacity. APNI expected that if the current roughly 80 nickel smelting facilities operated at full capacity, they would require about 315 million wmt of nickel ore per year, indicating a potential supply gap between the existing RKAB quota and actual demand. In addition, APNI expected Indonesia to import 15 million–25 million mt of Philippine nickel ore in 2026, up about 67% YoY, to supplement domestic trade ore supply.

Macro:

(1) The overall increase in the US July Producer Price Index (PPI) remained mild, indicating further easing inflationary pressures, and expectations for US Fed interest rate hikes in September cooled further.

(2) Today, the People’s Bank of China will conduct RMB 1,000 billion in outright reverse repo operations via a fixed-quantity, rate-tender, multiple-price allotment method, with a tenor of six months (185 days) and a maturity date of February 15, 2027 (rolled forward in case of holidays).

Spot Market:

On August 14, the SMM average price of #1 refined nickel was 127,800 yuan/mt, down 950 yuan/mt from the previous trading day. In terms of spot premiums, the average for Jinchuan #1 refined nickel was 1,400 yuan/mt, up 150 yuan/mt from the previous trading day, while the range for mainstream domestic brands of electrodeposited nickel was -100-500 yuan/mt.

Futures Market:

The most-traded SHFE nickel 2609 contract plunged in early trading and closed the morning session at 127,300 yuan/mt, down 1.12%.

Indonesia Nickel Miners Association (APNI) recommended keeping the 2026 nickel ore RKAB at 270 million wmt and additionally setting a 30 million mt strategic buffer, meaning the potential total quota could reach 300 million wmt. RKAB quotas were expected to be loose, nickel prices were in the doldrums in the short term, and the price range for the most-traded SHFE nickel contract was 125,000-130,000 yuan/mt.

Nickel Sulphate

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

Demand side, overall market activity was mediocre in mid-month; some downstream enterprises mainly picked up goods under long-term contract, or still held some raw material inventory, with weak stockpiling sentiment for spot order and low acceptance of nickel salt prices. Supply side, MHP payables and auxiliary material prices remained at high levels; some enterprises were willing to hold prices firm, but some upstream enterprises also had relatively high inventory levels and sought to sell and destocking. Looking ahead, the market was expected to remain dominated by destocking this month, and before month-end, prices were expected to overall show ya.

Inventory: This week, the upstream nickel salt smelter inventory index stayed at 8.1 days; the downstream precursor plant inventory index fell from 11.5 days to 10.7 days; and the integrated enterprise inventory index stayed at 9.9 days. In terms of buyer-seller strength, this week the upstream nickel salt smelter Willingness to Sell Sentiment Factor rose from 1.8 to 2.0; the downstream precursor plant procurement sentiment factor slipped from 2.5 to 2.3; and the integrated enterprise sentiment factor slipped from 2.5 to 2.3. (Historical data is available in the database.)

NPI

The SMM 10-12% high-grade NPI average price fell WoW by 2.8 yuan/nickel unit to 1,133 yuan/nickel unit (ex-factory, tax included). The average Indonesia NPI FOB index price increased WoW by $0.13/nickel unit to $146.52/nickel unit. This week, the spot market for high-grade NPI remained in a deadlock overall, with transaction volumes consistently limited. Supply side, nickel prices fell, while market expectations for a subsequent rise in supply gradually strengthened. Incremental supply outside China has not yet arrived at ports in a concentrated manner; arrivals at ports are expected to increase further in the second half of the month, and port operations have somewhat recovered. However, the ocean freight rate stayed high, creating cost disruptions for imported supply. Overall, suppliers’ quotes stayed high, but actual spot shipments were constrained; some willingness to hold prices firm showed signs of easing, and suppliers may choose to suspend or delay quotations. Demand side, mainstream steel mills had basically completed stockpiling for the peak season, and the overall procurement pace slowed down; only a small number of enterprises had restocking needs. Downstream procurement sentiment was generally cautious. There was a clear price spread between steel mills’ acceptable levels and suppliers’ quotes, and acceptance of high-priced cargo was low. As futures moved lower, steel mills’ procurement interest further declined, wait-and-see sentiment intensified, and spot deals in the market were relatively few. During the week, bullish-bearish divergence persisted; as futures weakened, market confidence loosened somewhat and bearish sentiment gradually heated up. Considering expectations for supply recovery and the current lack of downstream rigid demand, the short-term high-grade NPI market is expected to be under pressure.

Stainless Steel

This week, stainless steel futures were affected by macro sentiment and pulled back on overall weakness, driving stainless steel spot prices to pull back in tandem. Multiple bearish factors—including repeated changes in Indonesia’s nickel ore approvals, a hawkish US Fed, and geopolitical conflicts—resonated, pushing the center of futures lower. Spot-futures linkage in the spot market was weak. The market remained in the traditional off-season, with weak end-user rigid demand and purchases mainly made on an as-needed basis. In addition, steel mills’ production schedules increased in August, raising supply and demand pressure. However, Typhoon “Baihaitun” disrupted logistics, temporarily offsetting the supply increase; social inventory was basically stable, providing bottom support for spot. Cost side, NPI prices were firm. Although steel mill profits narrowed, rigid costs effectively limited the downside. Overall, the market showed a tug-of-war pattern characterized by “macro headwinds dragging, weak rigid demand in the off-season, steady inventory providing a floor, and resilient costs cushioning declines.” The short-term fundamentals were relatively weak, and prices faced pullback risks; however, the downside room was constrained by the dual support of inventory and costs, with the market mainly consolidating in the doldrums. Going forward, key focuses include macro sentiment, futures fluctuations, end-use demand recovery, and changes in inventory turnover.

This week, stainless steel finished product prices and production costs pulled back slightly in tandem. Driven by a sharp drop in SS futures, steel mill smelting profits narrowed significantly, with the 304 cold-rolled profit margin only about 0.24% to 0.68%. On the nickel raw material side, high-grade NPI stopped rising and pulled back; affected by the decline in SHFE nickel and disruptions from expectations of increased Indonesian nickel ore quotas, prices fell under pressure. As steel mill profits narrowed and pessimistic sentiment intensified, purchasing was weak, and the CIF China price for Indonesian high-grade NPI fell to 1,136 yuan/nickel unit. Stainless steel scrap prices were temporarily stable, but as futures weakened and the economic advantage narrowed, cost support weakened; in the short term, it will maintain a relatively weak pattern, with Shanghai mainstream 304 off-cuts quoted at 10,450 yuan/mt. On the chrome raw material side, high-carbon ferrochrome prices pulled back slightly, with Inner Mongolia mainstream quotations falling to 7,925 yuan/mt (50% metal content). Although market transactions were sluggish and supply was loose, declining ex-China chrome ore shipments and firm LME quotations provided some support for ferrochrome prices.

Nickel ore:

Philippines market:

In terms of prices, Philippine nickel ore prices were overall steady this week. Mainstream CIF China quotations were $46/wmt for Ni 1.3%, $56.5/wmt for Ni 1.4%, and $64.5/wmt for Ni 1.5%, all flat WoW.

Freight rates on major routes also remained unchanged: Surigao–Lianyungang $14.5/wmt, Surigao–Ningde $13.5/wmt, Zambales–Lianyungang $12.75/wmt, and Zambales–Ningde $12.25/wmt. Downstream smelter inventory in China was relatively sufficient, restocking demand was limited, and purchasing remained cautious.

In terms of weather, some nickel ore producing areas in the Philippines were affected by typhoons and related severe weather this week, causing disruptions to production at some mines, inland transportation, and port loading. Overall impacts on Palawan and Homonhon Island were relatively limited, but intermittent rainfall and worsening sea conditions occurred in some areas, leading to delays in vessel schedules and loading pace. Zambales was more noticeably affected by heavy rainfall and strong winds, with localized disruptions to some port operations and ore transportation. Overall, the typhoons mainly affected certain ports and loading, and did not cause widespread interruptions to Philippine nickel ore supply.

In terms of supply and demand and market sentiment, the Philippine nickel ore market overall still showed a pattern of relatively loose supply and weak demand. Despite typhoons causing temporary disruptions to ports and shipments in some areas, overall mine production and exports basically held up, and spot supply remained generally sufficient. Localized vessel schedule delays may tighten part of the spot supply in the short term, but are not enough to change the overall market structure of relatively loose supply.

Downstream smelters in China had relatively ample inventory, and procurement mainly met just-in-time production needs, with overall transactions subdued. Supported by freight and production costs, Philippine mines kept offers relatively firm and were unwilling to cut prices materially; however, amid relatively loose supply and limited demand recovery, downward pressure on low-grade nickel ore gradually increased. By contrast, high-grade nickel ore prices were relatively firm, mainly supported by stable procurement demand from NPI smelters and a relatively tight supply-demand balance for high-grade NPI raw materials.

Looking ahead, over the next week, as typhoon impacts gradually ease, Philippine mine production and port shipments are expected to progressively return to normal, though some ports may still see schedule adjustments. Overall market supply is expected to remain relatively loose, and downstream China is still expected to focus on just-in-time procurement, with limited improvement in demand. Against the backdrop of relatively loose supply and slow demand recovery, low-grade nickel ore prices are expected to remain under pressure, while high-grade ore prices stay relatively firm. Short-term market sentiment is expected to remain cautious, and the price trend for low-grade ore will mainly depend on the pace of downstream restocking in China, the recovery of Philippine ports, and subsequent spot supply.

Indonesia market:

In terms of prices, this week was the last week of the HMA pricing cycle for the first half of August, with HMA at $16,646/mt. Affected by recent declines in HMA and HPM, Indonesia’s nickel ore prices were generally weak; however, given ample market supply and high smelter inventory, actual transaction prices were basically stable WoW. CIF prices for limonite were about $29/wmt for Ni 1.2% and $31/wmt for Ni 1.3%; saprolite was about $52.6/wmt for Ni 1.4% and about $60/wmt for Ni 1.5%. Mainstream transaction prices for low-grade nickel ore were about $31/wmt. In the short term, with ample supply and cautious procurement, ore prices are expected to remain stable, and the market continues to watch RKAB additional quotas and their impact on supply.

In terms of weather, conditions in Indonesia’s main nickel ore producing areas were generally manageable. Morowali and Konawe saw intermittent rainfall, but it did not have a noticeable impact on mining, transportation, or port operations. Halmahera had relatively more rainfall; localized heavy rain may cause temporary disruptions to mining and logistics, but there were no widespread supply interruptions. Obi Island also saw intermittent rainfall, and overall mining and loading activities remained normal. Overall, this week’s weather had a limited impact on Indonesia’s nickel ore supply and logistics.

Supply and demand and market sentiment, Indonesia’s nickel ore market supply remained relatively ample. Saprolite ore inventory continued to edge up, while limonite ore inventory declined somewhat as some HPAL projects gradually ramped up production. At present, most smelters’ inventories were still sufficient for about two months, reducing the need for additional spot cargo purchases.

Policy and RKAB, this week Indonesia’s nickel ore market continued to focus on additional quotas under the 2026 RKAB. ESDM continued to emphasize that RKAB adjustments must be assessed based on actual production, downstream industrial demand, market conditions, and the overall supply-demand balance, rather than an automatic relaxation of quotas.

The Indonesia Nickel Miners Association (APNI) proposed adding a 30 million mt strategic buffer quota on top of the existing RKAB of about 270 million mt, bringing the potential total to about 300 million mt. APNI stated that, as Indonesia’s smelting capacity continued to expand, the nickel ore volume required for about 80 smelters to operate at full capacity could reach about 315 million mt/year, hence the need for additional buffer room.

Meanwhile, Weda Bay Nickel (WBN)’s additional RKAB became another focus this week. The market previously reported that WBN might receive an additional quota of about 25 million mt, but ESDM had not officially confirmed this additional quota, so it should not be included in approved supply at present. Subsequent RKAB adjustments for WBN will remain a key variable affecting Indonesia’s saprolite ore supply and market sentiment.

Overall, government policy remained centered on balancing downstream raw material demand with mineral resource controls. Whether APNI’s proposed 30 million mt buffer quota and WBN’s additional quota will ultimately be approved will directly affect expectations for nickel ore supply in H2.

Outlook, over the coming week, Indonesia’s nickel ore prices are expected to consolidate on a subdued note. Ample supply, relatively high smelter inventories, and cautious procurement will continue to limit upside room in prices. The market will continue to monitor approvals of new RKAB quotas and APNI’s proposed 30 million mt strategic buffer quota plan. If a large volume of new quotas is approved, increased supply may further depress ore prices; if approvals progress slowly or quota releases are limited, high-grade saprolite ore prices may receive some support. In the short term, the market is expected to remain largely on the sidelines.