[SMM Analysis] Sluggish Trading in the Nickel Intermediate Product Market, Awaiting Guidance from Papua New Guinea Tender Results

This week, MHP market transactions were sluggish, but the supply-demand relationship pushed offers higher. Supply side, affected by a tailings dam landslide incident at part of an MHP project in an Indonesian industrial park, some MHP project lines operated at low utilization, and MHP supply shrank. Demand side, March was the peak season for new energy, coupled with a rush to export by some downstream enterprises, overall demand improved and enterprises’ purchasing appetite increased. Under an overall tight supply-demand pattern, sellers were strongly inclined to hold prices firm, but transactions were limited, awaiting guidance from the Papua New Guinea tender results. Looking ahead, supply side, on the one hand, Indonesian government officials were pursuing accountability for the landslide accident, and some projects faced the risk of operating license revocation; together with heightened uncertainty in sulfur supply caused by tensions in the Middle East, this brought expectations of MHP supply contraction. On the other hand, IUI applications for new MHP projects were still in process, and there was no incremental supply in the short term. As downstream stockpiling demand was released, nickel payables and cobalt payables are expected to be more likely to rise than fall.

The high-grade nickel matte market remained in a tight balance, with payables unchanged. Mainstream sellers had sold out Q1 cargoes, spot market circulation was limited, and some sellers had stopped quoting. Looking ahead, high-grade nickel matte production growth is expected to be limited, and its supplementary role as an alternative raw material to MHP was evident; coupled with sellers’ strong willingness to hold prices firm, nickel payables are expected to be more likely to rise than fall.

For the key auxiliary material sulfur, prices rose this week due to a sharp supply reduction. Supply side, Qatar’s March sulfur contract price was FOB $520/mt, flat MoM. However, the Middle East situation remained deadlocked, with no easing in sight in the short term; Middle East prices could not be transacted in practice, and enterprises sought other import sources. Looking ahead, sulfur prices are more likely to rise than fall, and the Middle East situation and the realization of actual port arrivals will determine subsequent sulfur price trends.

For nickel prices this week, geopolitical tensions in the Middle East escalated sharply, risk-off sentiment rose rapidly, and nickel prices pulled back before rebounding. Overall, nickel prices fell MoM this week. In terms of payables, MHP and high-grade nickel matte nickel prices fell this week, while MHP cobalt prices rose.