[SMM Nickel Morning Meeting Summary] Fed Official's Dovish Remarks Ease Macro Pressure, the Most-Traded SHFE Nickel Contract Consolidates and Pulls Back in Early Trading

Sep 7 Morning Meeting Minutes

Market hot topics:

Australian battery materials company Pure Battery Technologies (PBT) is advancing its plan to invest approximately $350 million to build a precursor cathode active material (pCAM) plant in the Industropolis Batang Special Economic Zone in Central Java, Indonesia. The project has now entered the engineering design phase, with construction planned to start in 2027. The project intends to use mixed hydroxide precipitate (MHP) produced by local HPAL projects in Indonesia as raw material for further processing into high-value-added pCAM, thereby filling a key industry chain link between Indonesia's rapidly expanding nickel intermediate product capacity and downstream battery manufacturing. The project is expected to create approximately 1,000 jobs during the construction phase and provide about 200 permanent positions after commissioning.

Macro:

(1) US Fed Governor Waller turned dovish, and expectations for a September rate hike cooled significantly. Waller said recent data finally showed signs of slowing inflation, and if data over the next two weeks continues this trend, he would lean toward supporting keeping rates unchanged in the 3.50%-3.75% range; but he also warned that if inflation data comes in hot, a September hike remains possible. Overnight, US stocks rose for a second straight session, with the S&P 500 posting its biggest one-day gain in a month (+1.06%), the Dow rising 1.18%, and the 10-year Treasury yield pulling back to 4.766%.

(2) Precious metals surged, with gold prices rebounding strongly. COMEX gold futures rose 2.39% to $4,520.30/oz, and silver gained 3.24%; Goldman Sachs expects central bank gold buying demand to drive gold prices to $4,900/oz by the end of 2026. Cooling rate hike expectations plus increased buying by multiple central banks were the main drivers.

(3) US-Iran conflict continues, keeping oil prices firm at high levels. US Central Command said it has forced 87 merchant ships to reroute and disabled 3 vessels, continuing to implement the maritime blockade against Iran; Brent crude settled up 0.3% at $95.92/bbl, and WTI rose 0.73% to $91.67/bbl. Citi maintained its Q4 Brent forecast of $70, believing supply will be in surplus after the Strait of Hormuz reopens.

(4) LME base metals mostly rose, with nickel underperforming. LME copper futures rose 1.03% to $14,362/mt, tin futures gained 1.23%, while nickel futures edged down 0.05% to $16,905/mt, clearly lagging the sector. In China, the S&P China services PMI rose to 51.4 in August, and the composite PMI rose to 52.1; the 800 billion yuan new-type policy financial instruments began to be deployed.

Spot market:

On September 4, the average price of SMM #1 refined nickel was 129,050 yuan/mt, down 650 yuan/mt from the previous trading day. Spot premiums: The average price of Jinchuan #1 refined nickel was 1,650 yuan/mt, up 50 yuan/mt from the previous trading day. Domestic mainstream electrodeposited nickel was quoted in a range of -200 to 500 yuan/mt.

Futures market:

The most-traded SHFE nickel 2610 contract consolidated and pulled back in early trading, closing the morning session at 127,940 yuan/mt, down 0.60%.

Short-term outlook:

Waller's dovish remarks cooled expectations for a September rate hike, and the US dollar and US Treasury yields pulled back, marginally easing macro pressure. However, LME nickel edged lower overnight against the trend, clearly underperforming copper and other base metals. Combined with persistently high inventory and weak demand, nickel prices lack sufficient momentum to rebound. In the short term, the most-traded SHFE nickel contract is expected to trade in a range of 127,000-131,000 yuan/mt.

Nickel sulphate

As of this Friday, the SMM average price of battery-grade nickel sulphate slipped. Demand side, affected by weaker downstream orders, operating rates at some downstream enterprises moved lower this month. They mainly picked up goods under long-term contracts, with weak sentiment for spot order stockpiling and low acceptance of nickel salt prices. Supply side, some upstream enterprises held relatively high inventory levels and planned to lower operating rates to sell and destock. Looking ahead, the market is expected to maintain a weak supply-demand balance in the short term, with destocking as the main theme and prices likely to remain under pressure overall.

NPI

The SMM average price of 10-12% high-grade NPI fell 9.3 yuan/nickel unit WoW to 1,113.2 yuan/nickel unit (ex-factory, tax included). The average Indonesia NPI FOB index price fell $1.44/nickel unit WoW to $144.07/nickel unit. This week, high-grade NPI spot prices drifted lower overall, with negotiation centers continuing to shift down. Market trading was sluggish and liquidity was insufficient. Weakness in the stainless steel market transmitted upstream to raw materials, and combined with a soft nickel futures market, this gradually fueled market pessimism. Demand side, downstream steel mills generally held ample raw material inventory, with low purchase willingness. Most only made small purchases for immediate needs, and some steel mills suspended spot purchases. Steel mills intensified efforts to push for lower prices, continuously testing psychological price levels. Some cargo quotes showed discounts, and low-price inquiries increased, but actual transactions were limited. Upstream and downstream quotes diverged significantly, and transaction prices for fixed-price deals kept falling. Supply side, some suppliers faced losses when selling at low prices and chose to hold off on quoting. Other traders sold ahead of schedule to recover funds or bet on price spreads, exacerbating price fluctuations. Premiums for high-nickel-unit cargoes narrowed significantly. High ocean freight rates provided some cost support for certain imported cargoes, but not enough to reverse the overall downtrend. Market expectations were divided, with most participants bearish on the outlook and believing there is still room to hit bottom. In the short term, the market will continue to seek a bottom through bargaining.

Stainless steel

This week, stainless steel futures continued their weak trend, with prices breaking below the 13,700 yuan/mt level and bearish sentiment dominating the market. Although the "September peak season" has begun, end-user demand remained sluggish, with no concentrated stockpiling observed. Spot prices followed the decline, intensifying the supply-demand imbalance. Inventory showed structural divergence: warrant inventory steadily pulled back, driving a slight decline in social inventory, but high production schedules at steel mills combined with absent demand kept overall inventory pressure elevated. Profit-side pressure was prominent, as finished product prices fell more than raw material costs, pushing steel mills into losses and establishing a loss-making pattern. To alleviate pressure, steel mills continued to push for lower prices on nickel-based raw materials, forming a negative cycle of "falling finished product prices, profit losses, and raw material price suppression." Overall, the market exhibited a weak bargaining pattern characterized by a disappointing peak season, sluggish end-user demand, declining futures, and cost-side losses. With core bearish factors unresolved in the short term, the weak trend is likely to persist. Going forward, close attention should be paid to the pace at which futures stop falling, the progress of downstream end-user demand materialization, steel mill production schedule adjustments, and inventory destocking.

This week, stainless steel finished product prices and production costs pulled back in tandem, with steel mills maintaining a loss-making pattern. Based on 304 cold-rolled calculations, profit margins using current and inventory raw material costs were -0.78% and -2.16%, respectively. Raw material performance was mixed: on the nickel side, purchasing interest remained subdued due to disappointing "September peak season" demand, active price suppression by loss-making steel mills, and downward production schedule adjustments. The delivered tax-inclusive price of domestic Indonesian high-grade NPI fell by 8 yuan/nickel unit to 1,114 yuan/nickel unit. Stainless steel scrap was dragged down by weakening futures and spot prices as well as steel mill price suppression, with prices consolidating lower. The tax-exclusive price of 304 off-cuts in Shanghai fell by 200 yuan/mt to 10,100 yuan/mt, and the short-term outlook remains weak. On the chrome side, limited room for price cuts due to mainstream steel mill tender prices approaching retail levels and some production areas falling into losses kept prices stable, with Inner Mongolia high-carbon ferrochrome holding at 7,900 yuan/mt (50% metal content). Overall, with multiple bearish factors converging—disappointing peak season expectations, loss-driven price suppression by steel mills, and production schedule contraction—the bottom support for prices across the stainless steel industry chain continued to weaken, and the market is expected to maintain a weak bargaining pattern in the short term.

Nickel ore:

Philippine market:

In terms of prices, Philippine nickel ore prices remained broadly stable this week, with mainstream CIF China quotes at $46/wmt for Ni 1.3%, $56.5/wmt for Ni 1.4%, and $64.5/wmt for Ni 1.5%, all flat WoW. Raw material inventories at downstream Chinese smelters were relatively sufficient, and restocking demand remained weak, with purchases mainly aimed at meeting immediate production needs. Overall spot trading was sluggish. High-grade ore prices remained relatively firm, while low-grade ore continued to face some pressure amid ample supply and limited demand recovery.

Weather-wise, the weather risk in the Philippines' major nickel ore producing areas rose this week, with Zambales emerging as the main disruption zone. On September 4, the southwest monsoon (Habagat) brought heavy rainfall to Zambales, which may cause phased impacts on mining, land transport, and port loading in the short term. In contrast, operations in Palawan and other major producing areas remained largely normal. Overall, weather disruptions have not yet significantly altered the Philippines' overall supply landscape, but short-term operational risks in Zambales have increased.

Supply side, the Philippines' nickel ore supply remains relatively ample overall. Affected by recent heavy rainfall, Zambales production is expected to slow down in phases. Overall, short-term supply may face some weather disruptions, but not enough to create a significant supply tightening. Philippine nickel ore exports remain mainly influenced by downstream demand from China and Indonesia and rainy season weather. The Philippines' nickel ore exports to Indonesia increased significantly in H1, indicating that the Indonesian market remains an important demand source for Philippine ore.

For the Indonesian market, Philippine nickel ore CIF Indonesia prices face some downward pressure going forward. As Indonesian nickel ore prices were at relatively low levels in September, especially with ample supply of Ni 1.3–1.4% ore, Indonesian smelters' price acceptance for imported Philippine ore has declined. With local Indonesian ore prices low, Philippine miners may need to further lower CIF Indonesia quotes to maintain competitiveness in the Indonesian market. The price spread between Philippine ore and Indonesian local ore will become an important factor in subsequent procurement decisions. Meanwhile, Philippine ore export demand to Indonesia still shows some resilience, with Indonesia importing approximately 8.57 million mt of nickel ore from the Philippines in H1 2026, up 65.1% YoY, mainly flowing to Weda, Morowali, and Kendari.

Supply-demand and market sentiment-wise, the Philippine nickel ore market remains in a pattern of relatively loose supply and weak demand. Chinese downstream smelters hold relatively sufficient inventory, with procurement mainly based on immediate needs, and market transaction improvement is limited. With supply pressure not yet significantly alleviated, buyers' bargaining power remains strong. High-grade ore remains relatively firm due to relatively stable procurement demand from NPI smelters, while low-grade ore continues to face dual pressure from ample supply and weak demand. For the Indonesian market, low local nickel ore prices will further compress the import price space for Philippine ore.

Looking ahead, Philippine nickel ore supply is expected to remain generally normal over the next week, but heavy rainfall in Zambales may continue to disrupt local mine production and loading. Some spot supply may be delayed in the short term, but this is not enough to change the overall loose supply picture. In terms of prices, CIF quotes to the Chinese market are expected to remain in the doldrums, while CIF Indonesia prices face greater downward pressure. If Indonesia's local nickel ore prices continue to stay low, Philippine mines may need to further lower their CIF Indonesia quotes to sustain buying demand. Going forward, focus on the weather recovery in Zambales, loading progress at Philippine mines, Indonesia's local ore prices, and the restocking pace of downstream buyers in China and Indonesia.

Indonesia market:

In terms of prices, Indonesia's nickel ore CIF prices remained generally stable this week, with Ni 1.4%, 1.5%, and 1.6% quoted at $52.75/wmt, $59.2/wmt, and $64.1/wmt, respectively, little changed from previous prices. Smelter raw material inventories are still at relatively sufficient levels, restocking willingness is weak, spot transactions are generally sluggish, and nickel ore prices have limited upward momentum.

On the HMA front, Indonesia's nickel HMA for the first half of September fell to $16,733.33/mt, down $226.67/mt from $16,960/mt in the second half of August, a decline of about 1.33%. As a result, the HPM for the first half of September was lowered accordingly, with Ni 1.4%, 1.5%, and 1.6% falling to $54.07/wmt, $58.75/wmt, and $63.64/wmt, respectively. The simultaneous weakening of HMA and HPM further pushed down benchmark pricing at the mine level, while also reducing smelters' acceptance of high-priced ore.

Supply side, Indonesia's major nickel ore producing areas are currently in a relatively dry season overall, with limited rainfall, and mining, transportation, and port loading remain generally normal. Current weather conditions are favorable for mine production and shipments, and weather-related supply disruptions are weak. As the dry season continues, if additional RKAB quotas are released, market supply expectations still have room to improve.

Demand side, smelter raw material inventories are relatively sufficient, and spot purchases remain primarily need-based. High-grade ore (Ni 1.45% and above) still faces relatively strong purchasing competition due to limited local supply, and prices remain relatively firm; while Ni 1.3–1.4% ore is more amply supplied, with some demand continuing to be met by imported ore from the Philippines. Overall, price performance across different nickel ore grades remains clearly divergent.

On HPM premiums, after the September HMA reduction, the market's acceptance of high-premium ore has further decreased. Current spot transaction prices for limonite ore remain significantly below the theoretical HPM price, and HPAL enterprises have limited restocking motivation given sufficient raw material inventories. At the same time, the dry season is favorable for mine production and shipments, reducing supply-side disruptions, all of which puts pressure on HPM premiums. If subsequent RKAB approvals and quota releases further improve supply expectations, buyer bargaining power may continue to strengthen, and the discount between actual transaction prices for limonite ore and the theoretical HPM price could widen further.

On the policy front, the market is still awaiting subsequent RKAB approvals and actual supply releases. Market attention has shifted from mere quota expectations to actual quota implementation and the pace of mine shipments. Meanwhile, Indonesia implemented the new DHE SDA regulation on September 1, under which eligible mining export enterprises may enjoy more relaxed foreign exchange retention arrangements. To date, 64 mining export enterprises have met the relevant conditions. This policy mainly eases cash flow pressure for eligible miners, with limited short-term impact on actual nickel ore supply, but it may enhance capital turnover and sales flexibility for some export enterprises.

Looking ahead, Indonesian nickel ore prices are expected to remain in the doldrums in the short term. High-grade ore is supported by supply constraints, keeping prices relatively firm; low-grade ore and limonite ore continue to be pressured by ample inventory, weak demand, and the downward adjustment in HMA. After the September HMA decline, the theoretical HPM price will move lower in tandem, and further narrowing of the HPM premium will remain an important development in the limonite ore market. If subsequent RKAB supply is further released while HPAL restocking demand does not recover noticeably, the discount between spot prices and the theoretical HPM price may continue to widen. Going forward, the market will focus on RKAB approvals and actual quota releases, smelter restocking pace, HPM premium changes, and high-grade ore supply conditions.