[SMM Analysis] Downstream Rigid Procurement Demand Persisted, MHP and High-Grade Nickel Matte Payable Indicators Fluctuated at Highs This Week

This week, the MHP market was overall tight, with nickel and cobalt payables fluctuating at highs. Supply side, sulfur supply deficit caused some producers to plan to cut production, MHP supply declined, and transaction coefficients were pushed up. Demand side, downstream nickel salt prices showed weakness, the risk of losses persisted, and nickel salt smelters had relatively low acceptance of high-priced MHP. However, as downstream ternary demand recovered somewhat, some producers made just-in-time procurement, supporting the strengthening of MHP nickel payables. 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 pattern of weak supply and demand. 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, and available spot cargo was limited. On the demand side, constrained by downstream production line compatibility, actual consumption capacity was insufficient. Overall purchasing sentiment was weak, trading activity was low, and the high-grade nickel matte payable indicator remained stable.

International sulfur market supply continued to tighten, driving prices further higher. Middle East geopolitical tensions showed no significant easing, with approximately 1 million mt of loaded sulfur still stranded around the Strait of Hormuz. Combined with Turkey's export ban and the extension of Russia's ban, supply continued to tighten. Major Middle East producers significantly raised their official selling prices for May, with official prices in Kuwait, Qatar, and the UAE all hitting multi-year highs. Although high prices have already suppressed some demand, the magnitude of supply contraction still far exceeded demand shrinkage, making it difficult to reverse the strong price pattern. Sulfur prices are expected to stay high. Continued attention should be paid to geopolitical developments and the recovery of transportation channels.

Nickel prices, this week the U.S.-Iran situation kept reversing, and nickel prices fluctuated. Against the backdrop of rising MHP payables and stable high-grade nickel matte payable indicator, the absolute prices of MHP and high-grade nickel matte fluctuated along with nickel prices. In addition, MHP cobalt prices were similar to refined cobalt prices, basically stable. Overall, the intermediate product market is expected to hold up well in the short term.