[SMM Analysis] Spot cargo circulation is low, and MHP payables and the high-grade nickel matte payable indicator fluctuate at highs this week.

The MHP market was generally tight this week, with nickel and cobalt payables fluctuating at highs. On the supply side, Indonesia adjusted the HPM formula, driving expectations of rising limonite ore costs. Combined with a sulfur supply deficit that led some producers to plan production cuts, MHP supply declined, and transaction payables edged up. On the demand side, downstream nickel salt prices showed weakness, and loss risks persisted, leaving nickel salt smelters with relatively low acceptance for high-priced MHP. However, recovering downstream ternary demand created some restocking needs, supporting firmer MHP nickel payables. Amid tight supply-demand expectations, the short-term market is expected to hold up well.

The high-grade nickel matte market also saw weak supply and demand. High-grade nickel matte currently holds a clear cost advantage over MHP. On the supply side, mainstream suppliers had already completed long-term contract signings, leaving limited available spot cargo. On the demand side, downstream lines' compatibility constraints limited actual consumption capacity. Overall purchasing sentiment remained weak, trading activity was low, and payables held steady.

The international sulfur market saw sustained supply tightness, pushing prices further higher. Geopolitical tensions in the Middle East showed no signs of easing, with a significant volume of loaded sulfur still stranded in the Strait of Hormuz. Turkey's export ban was extended to end-September, and Russia's ban was extended to June 30, keeping supply under pressure. Middle Eastern producers sharply raised June official selling prices: ADNOC set its OSP for the Indian subcontinent market at $860/mt (FOB Ruwais), up $100/mt from May, a record high; QatarEnergy and Kuwait's KPC both raised June contract prices to $805/mt (FOB), up $65/mt and $40/mt MoM, respectively. Although high prices have dented some demand, the supply contraction far outweighed demand shrinkage, making it difficult to reverse the strong price trend. Sulfur prices are expected to stay high. Further attention is needed on geopolitical developments and transport route recovery.

As for nickel prices, this week's US economic data heightened market concerns over interest rate hikes, prompting broad-based pullbacks across base metals, while continued inventory buildup added downward pressure on nickel prices. With MHP payables and high-grade nickel matte payables steady, their absolute prices fell in line with the decline in nickel prices. Additionally, cobalt prices in MHP and refined cobalt prices also dropped. Overall, the intermediate product market is expected to hold up well in the short term.