Upward Trend in High Nickel Pig Iron Prices Amid Supply and Demand Shifts

In this week's nickel market, the price trend of high nickel pig iron (NPI) has been particularly noteworthy. According to market monitoring, the average price of SMM 8-12% high nickel pig iron reached 941.1 yuan/nickel point, an increase of 5.2 yuan/nickel point compared to last week. Meanwhile, the Indonesian NPI FOB index was also adjusted up by 1.3 USD/nickel point compared to last week, indicating a further recovery of market prices.

From the supply side, domestic high nickel pig iron production has been affected by previously weak prices, exacerbating losses for smelters, prompting some enterprises to carry out equipment maintenance and reduce production, leading to a slight decline in output. In contrast, most companies in Indonesia, driven by profits and improved weather conditions recently, do not expect to cut production, which has provided some support on the supply side.

On the demand side, market trading activity has been somewhat weak due to the approach of the Spring Festival. The high proportion of long-term contracts at stainless steel mills, coupled with the market's optimistic outlook on future price trends, has led to a scarcity of circulating resources and a slight recovery in prices. It is anticipated that high nickel pig iron prices will maintain a steady upward trend after the holiday.

It is noteworthy that the average discount of high nickel pig iron to electrolytic nickel narrowed to 319.55 yuan/nickel point this week, down 20.1 yuan/nickel point from last week, reflecting a slight increase in high nickel pig iron prices. Due to tight circulating resources in the market, the price of high nickel pig iron is expected to continue to rise slightly.

In the pure nickel market, the Indonesian Nickel Association formally announced that the 2025 RKAB quota has been approved at 298 million wet tonnes, alleviating previous concerns about a tightening supply of Indonesian nickel ore, causing nickel prices to be under pressure. Furthermore, despite the continued profitability of exports, the ongoing increase in LME nickel inventory has obstructed further upward movement in nickel prices, resulting in a pullback of LME nickel prices this week.

Overall, in the short term, high nickel pig iron is expected to continue its upward trajectory under the backdrop of tight circulating resources, while pure nickel prices may remain under pressure due to inventory accumulation and bearish news about nickel ore. The discount gap between high nickel pig iron and electrolytic nickel is expected to continue narrowing.

From a raw material standpoint, as the market gradually enters the Spring Festival holiday period, the price of auxiliary materials has temporarily stabilized this week. In the Philippines, due to the rainy season, nickel ore shipments are limited, trading activity is subdued, and prices remain stable. The continued rise in high nickel pig iron prices has alleviated losses for smelters.

Looking ahead to next week, auxiliary material prices may remain stable post-Spring Festival, while nickel ore prices show no significant downward trend. With market confidence in the future remaining strong, high nickel pig iron prices are likely to maintain a steady upward trend, potentially further improving the profitability of smelters.