10.16 Morning Meeting Minutes
Market hot topics:
According to Tri Winarno, Director General of Mineral and Coal at Indonesia's Ministry of Energy and Mineral Resources (ESDM), the Indonesian government has approved a revised 2026 RKAB nickel ore production quota of approximately 290 million mt. He also noted that the government's initial target for 2026 RKAB nickel ore production was set at around 250-260 million mt.
Macro:
(1) US September PPI ran hot, with inflationary pressures spreading. September PPI rose 1.3% MoM, the largest gain in over four years (more than double the 0.6% expected), and climbed 6.3% YoY, the highest since December 2022, driven by a 20% surge in gasoline prices. Core PPI excluding food, energy, and trade still rose 0.5%, indicating inflation is broadening across more sectors. Retail sales beat expectations. Traders still see a 91% probability of at least one rate hike before December.
(2) Risk-off sentiment reversed, with US Treasuries and the dollar retreating from highs. Credit risk concerns around AI companies (CoreWeave, etc.) intensified and tech stocks remained under pressure, driving funds into Treasuries for safety. The 10-year Treasury yield plunged more than 10 bps intraday, falling for a third straight session to 5.04% (the lowest since September 23), while the US dollar index posted its biggest drop in over a month (-0.3%), erasing gains driven by the CPI. The probability of an October rate hike fell back to 29%. Market focus shifted from "inflation" to "the impact of high rates on growth and corporate debt servicing."
(3) Fed Chairman Warsh will speak tonight at the IMF-World Bank Annual Meetings in Bangkok, marking the last opportunity to signal rate intentions before the blackout period ahead of the October FOMC meeting begins on Saturday. Before the September rate hike, Warsh had released hawkish signals to guide the market, and with inflation exceeding expectations this time, his remarks are drawing close attention.
Spot market:
On October 16, the average price of SMM #1 refined nickel was 117,450 yuan/mt, down 1,700 yuan/mt from the previous trading day. In terms of spot premiums, the average premium for Jinchuan #1 refined nickel was 4,750 yuan/mt, up 450 yuan/mt from the previous trading day, while mainstream domestic electrodeposited nickel brands traded in a range of 0-600 yuan/mt.
Futures market:
The most-traded SHFE nickel contract (2611) opened lower in early trading, dipped, then rebounded. As of the morning close, it settled at 115,790 yuan/mt, down 0.10%, with open interest decreasing by approximately 3,400 lots.
Short-term outlook:
US Treasuries and the dollar retreated from highs, marginally easing macro pressure. SHFE nickel rebounded after opening lower in the morning session, but nickel's own fundamentals of high inventory and weak demand remain unchanged. The rebound was still driven by bear short-covering, lacking active bullish participation. Tonight's speech by Warsh is a key variable—if he remains dovish, sentiment may recover; if he turns hawkish, pressure will resume. In the short term, the most-traded SHFE nickel contract is expected to trade in a range of 114,000-120,000 yuan/mt.
Nickel Sulphate
As of this Thursday, SMM battery-grade nickel sulphate average price declined. Demand side, post-holiday production days were relatively limited, and demand did not show significant recovery. Downstream enterprises' spot external purchase volumes were relatively constrained, and price acceptance weakened notably. Supply side, some upstream enterprises, affected by weakening downstream demand, plan to reduce operating rates and seek shipments to destock. However, refined nickel conversion and recycling enterprises' operating rates remained at relatively high levels, keeping overall nickel salt supply ample. 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 are expected to remain under pressure overall.
Inventory side, this week upstream nickel salt smelter inventory index slipped from 7.8 days to 7.6 days, downstream precursor plant inventory index declined from 11.4 days to 10.5 days, and integrated enterprise inventory index fell from 9.8 days to 9 days. On buying and selling strength, this week upstream nickel salt smelter Willingness to Sell Sentiment Factor held at 2.1, downstream precursor plant purchasing sentiment factor held at 2.0, and integrated enterprise sentiment factor slipped from 2.2 to 2.1. (Historical data can be queried in the database)
NPI
SMM 10-12% high-grade NPI average price fell 7.9 yuan/nickel unit WoW to 1,029.4 yuan/nickel unit (ex-factory, tax included), and the Indonesia NPI FOB index average price fell $0.7/nickel unit WoW to $133.2/nickel unit. This week, the high-grade NPI market continued to drift lower, with the price center moving further down and bearish sentiment intensifying. Supply side, market supply remained ample overall, with some traders opting to hold back and wait, leading to divergent quoting patterns, and more transactions shifting to parity-based negotiations referencing average prices. Demand side, the September-October peak season expectations were falsified, downstream stainless steel product prices continued to weaken, and some steel enterprises adjusted production structures and scheduled maintenance and production cuts, dampening nickel pig iron consumption expectations. Meanwhile, steel scrap prices were lowered again, and refined nickel prices continued to fall, further enhancing the substitution advantage of alternative raw materials. Steel mills proactively reduced NPI purchases, with procurement expectations continuously revised downward, and mills that had previously intended to purchase also delayed entering the market. Negotiation centers continued to shift lower, with a notable price spread between high and low quotes. High-priced cargoes struggled to find deals, while only low-priced cargoes had negotiation opportunities. Overall trading was sluggish, with few substantial bulk transactions. Sentiment side, expectations for the price bottom continued to probe lower across market participants, with most players believing there is still downside room, and the market awaiting actual steel mill purchases to verify bottom support.
Stainless Steel
This week, the stainless steel spot market showed an overall weak pattern. Affected by the continued weakness in SS futures, mainstream stainless steel producers lowered list prices. Coupled with post-holiday restocking demand having been largely released, market transactions weakened, and spot prices moved lower in tandem. Spot premiums for 304/2B in Wuxi fluctuated within the range of 700-1,050 yuan/mt. Macro headwinds and a stronger US dollar index dragged the overall nonferrous metals futures into the doldrums, further pressuring stainless steel prices. Meanwhile, inventory shifted from decline to increase, ending the earlier sustained destocking pace, with social inventory accumulating again and supply pressure in the industry rebounding somewhat. Overall, weak demand and inventory accumulation created headwinds, while low valuations, production cuts providing a floor, and profit recovery offered support, leaving the market in a balanced tug-of-war between longs and shorts and keeping prices consolidating at lows. End-use demand remained generally weak, and post-holiday production resumptions proceeded gradually, making a concentrated restocking-driven rally unlikely, with rigid demand release at a slow pace. Supply and cost side will continue to provide bottom support, with steel mill production cuts steadily implemented, supply pressure marginally easing, while the decline in raw material prices slowed and steel mill profitability recovered. In summary, stainless steel prices are unlikely to rise or fall significantly in the short term, and attention should be paid to the pace of end-user restocking after resumptions, the implementation of steel mill production cuts, raw material price fluctuations, and the progress of inventory destocking.
This week, stainless steel product and raw material prices pulled back in tandem, while steel mill profits remained basically stable with a slight pullback. Based on 304 cold-rolled products, the profit margin calculated from current raw materials recovered to 1.42%, achieving positive profitability; however, dragged by previously high-priced raw material inventories, the profit margin calculated from inventory raw materials remained at -2.54%, and the pressure from destocking on actual profitability has not yet been fully lifted. NPI raw material prices fell notably, with SHFE nickel moving lower under macro headwinds and NPI market sentiment turning pessimistic; demand declined under expectations for stainless steel mill production cuts, and purchase prices for stainless steel scrap were lowered during the week, further pressuring high-grade NPI prices, with prices in the doldrums amid broadly bearish market sentiment. As of this Friday, the delivered duty-paid price of Indonesian high-grade NPI with 10-12% nickel content in China fell by 17.5 yuan/nickel unit to 1,022.5 yuan/nickel unit. Stainless steel scrap prices also declined; although its cost advantage over high-grade NPI widened, unresolved tax invoice issues, cautious year-end purchases by steel mills, and continued declines in production schedules kept demand weak and the downtrend intact. Chrome-based raw material prices also pulled back slightly, with high-carbon ferrochrome prices falling to their lowest level since 2025, and current retail prices notably below mainstream stainless steel mills' October procurement prices, reflecting clear market pessimism. Overall, the simultaneous weakening of NPI, stainless steel scrap, and ferrochrome prices continued to drive down stainless steel smelting costs. Looking ahead, expectations for steel mill production cuts are likely to persist, with insufficient demand-side support for raw materials, making it difficult to change the weak pattern for high-grade NPI and stainless steel scrap in the short term; for ferrochrome, although producers are already facing losses, the bottom for prices still needs to be consolidated as chrome ore cost support loosens. Overall, the raw material side will remain in the doldrums, and stainless steel costs still have room to move lower, but the drag from high-priced inventory raw materials will continue to constrain steel mills' actual profitability.
Nickel ore:
Philippine market:
In terms of prices, Philippine nickel ore prices continued to decline across all grades this week, with the market weakness extending further. For low-grade ore, the price range for **0.7% Ni, Al≥5%** fell to $16–17/mt, with a midpoint of $16.5/mt, down $1/mt from the previous period; 0.7% Ni, Al<5% fell to $22–24/mt, with a midpoint of $23/mt, down $1/mt; 0.9% Ni, Al 7% min fell to $15–17/wmt, with a midpoint of $16/wmt, down $1/wmt; 0.9% Ni, Al 7% max fell to $22–23/wmt, with a midpoint of $22.5/wmt, down $1/wmt. Declines were relatively more pronounced for medium- and high-grade ore, with 1.3% Ni falling to $27–29/wmt, with a midpoint of $28/wmt; 1.4% Ni falling to $37–39/wmt, with a midpoint of $38/wmt; 1.5% Ni falling to $44–47/wmt, with a midpoint of $45.5/wmt; and 1.8% Ni falling to $72–74/wmt, with a midpoint of $73/wmt, all down $2/wmt from the previous period.
The continued weakening of Philippine ore prices was mainly driven by cautious downstream purchasing and overall pressure on the regional nickel ore market. Chinese downstream raw material inventories remain relatively ample, estimated to cover about 2 months, and spot purchases are mainly need-based restocking. With demand lacking significant growth, buyers have limited acceptance of high-priced imported ore, and Philippine mine offers still face some downward pressure. Meanwhile, ocean freight rates from the Philippines to China remain at relatively high levels, meaning the FOB price declines have not fully translated into CIF purchasing advantages, further limiting transaction activity for imported ore.
On the weather front, major nickel ore-producing areas in the Philippines continued to be affected by the ITCZ and seasonal rainfall recently, with persistent rain and thunderstorms in parts of Palawan, Visayas, and Mindanao. Zambales was notably impacted by the rainy season, with some mines facing restrictions on mining, land transport, and vessel loading at ports, reducing actual shipment capacity. In contrast, areas such as Palawan maintained a certain level of shipment capability, so overall Philippine supply has not yet seen a comprehensive shortage, but regional supply divergence has widened.
In terms of supply-demand and market sentiment, the supply contraction in Zambales has not yet provided significant support to prices, mainly because Chinese downstream inventories remain sufficient and willingness to purchase imported ore is weak. Meanwhile, the continued decline in Indonesian nickel ore prices further weakened the price competitiveness of Philippine ore entering the Indonesian market. With the official downward revision of Indonesia's HPM for the second half of October, the regional ore price center shifted further down. If local Indonesian ore prices remain under pressure, Philippine mines may still adjust FOB quotes further to maintain transactions. In the short term, the Philippine nickel ore market is expected to remain in the doldrums, with subsequent focus on the recovery of Zambales shipments, actual Palawan shipments, ocean freight rates to China, and changes in Indonesian ore prices.
Indonesian market:
In terms of prices, Indonesian nickel ore spot prices continued to weaken this week. The latest SMM prices show that the average prices of Ni 1.2% limonite, Ni 1.3% limonite, Ni 1.4% saprolite, Ni 1.5% saprolite, and Ni 1.6% saprolite were $25.5/wmt, $27.5/wmt, $47.1/wmt, $52.5/wmt, and $57.1/wmt, respectively. Compared with the previous $26.5/wmt, $28.5/wmt, $51.8/wmt, $58.5/wmt, and $63.4/wmt, they fell by $1.0/wmt, $1.0/wmt, $4.7/wmt, $6.0/wmt, and $6.3/wmt, respectively. The decline in medium- and high-grade saprolite widened notably, indicating a further downward shift in the market price center.
In terms of policy prices, Indonesia's Ministry of Energy and Mineral Resources (ESDM) has officially released the nickel ore benchmark price for the second half of October 2026. The nickel HMA for the second half of October was $15,847.67/mt, down $475/mt from $16,322.67/mt in the first half of October, a decline of 2.91%. The corresponding HPM was revised down in tandem, with Ni 1.2% at $22.44/wmt, down $0.75/wmt; Ni 1.3% at $44.58/wmt, down $1.49/wmt; Ni 1.4% at $50.05/wmt, down $1.61/wmt; Ni 1.5% at $54.48/wmt, down $1.74/wmt; and Ni 1.6% at $59.12/wmt, down $1.88/wmt. The renewed downward revisions in HMA and HPM provided a lower price benchmark for mine-side quotes and further reinforced the current weak market expectations.
In terms of supply, the supplementary 2026 RKAB quotas are being gradually released, and market attention has shifted from quota approvals to whether the new quotas can actually translate into production and shipments. Newly added RKAB quotas will not immediately create spot supply, as mines still need to carry out equipment deployment, road maintenance, inventory preparation, and logistics arrangements. However, as mines that have obtained additional quotas gradually resume production, there is still room for further increases in actual nickel ore supply in Q4. Against the backdrop of weak demand, expectations of supply growth continue to weigh on ore prices.
On the demand side, raw material inventories at Indonesian smelters remain relatively sufficient, estimated to last about two months overall, limiting the momentum for concentrated short-term restocking. Spot purchases are mainly driven by essential production needs. Meanwhile, the current ore price adjustment shows a clear grade-based divergence, with Ni 1.4–1.6% Saprolite prices falling significantly more than low-grade Limonite, reflecting a shift in the previously tight market structure for high-grade ore. The bargaining center between buyers and sellers is tilting further toward the procurement side.
Regarding El Niño and water resources, Indonesia is currently facing persistent dry conditions and industrial water shortages, rather than the heavy rainfall impacts seen in the Philippines. Industrial water supply pressures in nickel industry hubs such as Morowali have already affected operations at some smelting facilities. SMM survey shows that some RKEF production lines have been running at approximately 30–40% of normal levels since September 22, though the impact remains limited to certain lines rather than a full-scale production cut across the entire industrial park.
The impact of water shortages on the nickel ore market is mainly reflected on the demand side. After RKEF production lines reduce load, nickel ore consumption at the affected lines declines accordingly, reducing spot procurement demand at some smelters. Given already sufficient raw material inventories, if water restrictions persist, actual ore consumption at the smelting end may fall further below previous expectations. The simultaneous emergence of supply growth expectations from newly approved RKAB and demand weakening from RKEF load reductions is exerting pressure on spot ore prices from both the supply and demand sides.
On the policy and market sentiment front, the HMA fell 2.91% in the second half of October, with HPM across all grades revised downward. Combined with the continued release of newly approved RKAB and sufficient smelter inventories, ore prices lack clear upward momentum in the short term. In particular, spot prices for Ni 1.4–1.6% Saprolite fell notably this week, indicating that expectations of HPM cuts and supply increases are gradually being reflected in actual market quotes. At the same time, low-load operations at some RKEF lines in Morowali are further weakening ore consumption, keeping market sentiment cautious.
Looking ahead, the Indonesian nickel ore market is expected to remain in the doldrums in the short term. With the official HPM reduction in the second half of October, market attention will shift to the extent to which the new benchmark prices are transmitted to actual transaction prices at mines, as well as the pace at which newly approved RKAB translates into actual production and shipments. On the demand side, focus will be on smelter inventory drawdown, water supply conditions in Morowali, and operating rates at affected RKEF lines. If mine supply continues to increase while smelting-side procurement demand remains constrained by inventories and water issues, spot nickel ore prices may face further downward pressure.
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