Downstream Cost Pressure Persists and Acceptance Is Weak; Nickel Intermediate Product Payables Were in the Doldrums This Week
This week, the MHP market supply-demand pattern remained relatively loose, with nickel and cobalt payables soft. On the supply side, after the strait reopened, MHP production at some producers recovered somewhat, while some traders also released some inventory recently, lifting available market supply. On the demand side, downstream nickel salt and cobalt salt prices remained weak. Affected by the SHFE and LME cobalt price spread, cobalt sulphate production is under significant loss-making pressure, and salt plants have relatively low acceptance of high-priced MHP, pressuring MHP payables. With supply rising and demand weak, MHP payables are likely to remain soft in the near term.
The high-grade nickel matte market is also in a supply-demand pattern where both supply and demand are weak. Currently, high-grade nickel matte has a clear economic advantage over MHP, but on the supply side, mainstream 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 buying sentiment is weak, trading activity is low, and payables remained stable.
The current sulphur (CIF Indonesia) price is $1,000-1,100/mt, with the average price down $25/mt from $1,050/mt for the week of August 22. In terms of transactions, an Indonesian phosphoric acid producer purchased Canadian granular sulphur at $1,135/mt (30,000 mt, September shipment). There were also market reports that Middle East cargoes traded at $1,050/mt and $1,030/mt on a CIF basis.
Overall, the global supply shortage pattern remains unchanged. Shipping through the Strait of Hormuz is restricted, and the supply gap is providing bottom support for prices (buying interest has emerged near $1,000/mt). However, MHP smelters face procurement cost pressure and broadly resist high prices, with transaction prices continuing to move toward the lower end of the range, reflecting that downstream acceptance is materially suppressing upside room for prices. Sulphur prices are expected to consolidate on a subdued note at high levels next week, with attention needed on shipping progress for Middle East cargoes and changes in procurement pace at Indonesian nickel smelters.
Nickel Prices: this week nickel prices drifted lower, mainly affected by macro pressure and expectations of weak demand. This week, nickel prices for MHP and high-grade nickel matte consolidated in tandem with nickel prices. In addition, MHP cobalt prices fell sharply on lower cobalt payables. Overall, the intermediate product market will remain under pressure in the near term.
