The average price of SMM 10-12% high-grade NPI fell 9.3 yuan/nickel unit WoW to 1,113.2 yuan/nickel unit (ex-factory, tax included), and the average price of the Indonesia NPI FOB index fell 1.44 $/nickel unit WoW to 144.07 $/nickel unit. This week, spot high-grade NPI drifted lower overall, with negotiation centers continuing to move down, market trading sluggish, and liquidity insufficient.
The weakening stainless steel market transmitted upward to the raw material side, compounded by soft nickel futures, gradually fueling market pessimism. On the demand side, downstream steel mills generally held ample raw material inventories, with low purchase willingness. Most only made small volumes of essential purchases, and some steel mills suspended spot procurement. Steel mills intensified efforts to push for lower prices, continuously testing psychological price levels, with discounts appearing on some cargo quotes. Low-price inquiries increased, but actual transactions remained limited, with significant divergence between upstream and downstream quotes, and fixed-price transaction prices kept moving lower. On the supply side, some suppliers faced losses when selling at low prices and chose to hold off on quoting; other traders rushed to sell to recover funds or bet on price spreads, amplifying price fluctuations, and premiums on high-nickel-unit cargoes contracted notably. High ocean freight rates provided some cost support for certain imported cargoes, but not enough to reverse the overall downtrend. Market expectations diverged, with most participants bearish on the outlook, believing there is still room to hit bottom, and the market will continue to search for a bottom in the short term.
From the perspective of NPI-to-high-grade nickel matte conversion, the average discount of high-grade NPI against refined nickel narrowed slightly this week to -163.5. During the week, nickel prices and high-grade NPI weakened in tandem, but the pace of decline differed between the two, leading to a narrowing of the discount. Looking ahead to next week, NPI prices are expected to continue their downward trend, and the discount may widen somewhat, but at this stage it is still difficult to drive NPI conversion to high-grade nickel matte. By comparison, directly producing NPI still offers higher profitability.
Domestic nickel ore prices remained stable this week, while Indonesian nickel ore prices edged lower. However, driven by the continued rise in domestic coke prices, auxiliary material costs for smelting in both China and Indonesia increased simultaneously. Coupled with ocean freight rates from Indonesia to China remaining at elevated levels, multiple factors jointly squeezed smelting margins. As a result, profit margins for nickel pig iron production in both China and Indonesia came under pressure this week. Looking ahead to next week, with raw material cost pressure yet to ease, profit margins for nickel pig iron production in both regions are expected to narrow further.
