[SMM Analysis] MHP Transactions in China Face Rebound Pressure; Cost and Supply Constraints Limit Downside

Published: Oct 07, 2026 17:43 (GMT+8)

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During the holiday, MHP transactions in China were similarly sluggish. After the holiday, MHP payables are expected to face significant rebound pressure, but the downside is limited.

Cost side, according to SMM calculations, due to the sustained drop in cobalt prices, the current theoretical cash cost of MHP production (after cobalt credit) is approximately $14,800/mt Ni, while based on current nickel prices multiplied by payables, the MHP selling price is approximately $13,600/mt Ni, indicating significant immediate losses.

Supply side, constrained by the aforementioned cost pressure and water shortages in some industrial parks, MHP production schedules remain generally cautious. October output is expected to decline slightly from September, alleviating the significant oversupply pressure to some extent.

Demand side, as nickel sulphate and cobalt sulphate have yet to stop falling, salt producers remain conservative in their willingness to purchase MHP, with producers overall maintaining purchases on an as-needed basis. However, at the same nickel prices, if payables decline by a further 2%-3%, the economics of producing electrodeposited nickel from externally purchased MHP could potentially recover, providing support for MHP demand.

Overall, weak downstream demand limits a reversal in MHP payables, but gradually intensifying cost pressure, coupled with support from the refined nickel production window, leaves limited downside for MHP payables. The market still needs to monitor when cobalt and nickel prices will stop falling and stabilise.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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