[SMM Analysis] Intermediate Product Production Cuts Materialized, MHP and High-Grade Nickel Matte Payable Indicator Stayed High This Week

The MHP market continued its weak supply-demand pattern this week, with nickel and cobalt payables stabilizing at highs. Supply side, Indonesia adjusted the HPM formula, creating expectations for limonite ore cost increases. Combined with expectations for production cuts at some producers due to sulphur supply deficit, overall MHP supply is expected to tighten, with offers rising. Demand side, downstream nickel salt prices rose this week, but losses risks persisted, and nickel salt smelters showed relatively low acceptance of high-priced MHP. However, as nickel prices held up well, refined nickel enterprises' purchasing demand remained, supporting MHP nickel payables strengthening. Under the influence of tight supply-demand expectations, the market is expected to hold up well in the short term.

The high-grade nickel matte market was also in a weak supply-demand pattern. Currently, high-grade nickel matte has a clear economic advantage over MHP, but on the supply side, mainstream suppliers have completed long-term contract order signing, with limited available spot cargo. Demand side, constrained by downstream production line compatibility, actual consumption capacity was insufficient. Overall purchase sentiment was weak, trading activity was low, and the high-grade nickel matte payable indicator remained stable.

Sulphur market, international sulphur market supply continued to tighten, pushing prices further higher. Middle East geopolitical tensions showed no signs of easing, with no clear timetable for resumption of navigation through the Strait of Hormuz. Combined with Turkey's export ban and Russia's ban extension, supply continued to tighten. Given that supply contraction far exceeded demand decline, the strong price pattern is difficult to reverse. Sulphur prices are expected to stay high and further push up downstream sulphuric acid and new energy material costs. Continued attention is needed on geopolitical developments and transport corridor recovery.

Nickel prices, news of Indonesian intermediate product production halts fermented this week, with nickel prices rising sharply on Friday. Against the backdrop of rising MHP payables and stable high-grade nickel matte payable indicator, absolute prices of MHP and high-grade nickel matte rose in tandem with nickel prices. Additionally, MHP cobalt prices also rose, driven by rising refined cobalt prices. Overall, the intermediate product market is expected to hold up well in the short term.