[SMM Analysis] Nickel Intermediate Product Market Weekly Review: Weak Supply and Demand Continued, MHP Payables Under Pressure

The MHP market continued its weak supply-demand pattern this week, with demand-side weakness playing a more dominant role, putting nickel payables and cobalt payables under pressure. Downstream nickel salt prices fell, and nickel salt smelters further reduced their acceptance of high-priced MHP, widening the psychological price spread between buyers and sellers and making spot order transactions difficult. Although supply contracted somewhat, demand shrank to a greater extent, which was the direct cause of the decline in MHP payables. Weakness on the nickel salt side failed to provide support for MHP prices, and the market is expected to remain in the doldrums in the short term.

The high-grade nickel matte market was also in a weak supply-demand pattern. Currently, high-grade nickel matte holds a clear cost advantage over MHP, but on the supply side, major suppliers have completed long-term contract order signing, leaving limited available spot cargo; on the demand side, actual consumption capacity was insufficient due to downstream production line compatibility constraints. Overall purchase sentiment was weak, trading activity was low, and the payable indicator remained stable.

Sulfur market, the impact of supply tightening persisted, with prices hitting record highs. Navigation through the Strait of Hormuz had not yet resumed, compounded by Russia's export ban extending through June 30, with supply disruption risks continuing to escalate. Price-wise, China's solid sulfur transaction prices held at 6,300 yuan/mt, CIF Indonesia at approximately $900/mt, and Middle East FOB prices were all at historical highs. However, downstream enterprises showed low acceptance of high prices, and the transmission channel from rising costs to end-use product prices remained obstructed. Close attention should be paid to developments in geopolitical events and the recovery of shipping routes going forward.

Nickel prices, the market was caught between geopolitical risk fluctuations and weak fundamentals, with nickel prices declining WoW. Against the backdrop of falling MHP payables and stable high-grade nickel matte payable indicator, the absolute prices of MHP and high-grade nickel matte moved lower in tandem with nickel prices. In addition, MHP cobalt prices fell in absolute terms under the dual impact of cobalt payables pullback and declining refined cobalt prices. Overall, the intermediate product market is expected to remain under pressure in the short term.