In April, nickel prices surged rapidly, driven by several positive factors including Indonesia's revision of its nickel ore benchmark price, production cuts at Eramet's nickel mine due to exhausted quotas, and output reductions at Indonesian hydrometallurgical plants due to sulfuric acid shortages. However, as these supportive influences waned in May and nickel ore supply from the Philippines recovered quickly following the end of the rainy season, nickel prices retreated from their recent highs.
Recovery in Philippine Nickel Ore Supply On the ore supply side, the end of the rainy season in the Philippines' main production areas has led to a significant increase in shipments from mines, with most operations resuming normal deliveries. This has alleviated the previously tight supply situation, putting downward pressure on Philippine nickel ore prices. The CIF price for ore with a 1.3% nickel grade has fallen to $50 per wet metric ton, while the price for 1.4% grade ore has dropped to the range of $58-60 per wet metric ton. According to the Philippine Statistics Authority, the country's nickel ore exports rebounded to 5.4755 million tons in March, more than double the volume from March of the previous year. Exports to China totaled 3.2322 million tons, with 2.2432 million tons shipped to Indonesia. Due to differing statistical methodologies, data from China's General Administration of Customs shows imports of nickel ore from the Philippines in March were 1.3932 million tons, a year-on-year increase of 16%. Total imports for the first three months of the year reached 4.24 million tons, up 18% year-on-year, with imports from the Philippines accounting for approximately 81% of the total. Regarding port inventories, Mysteel data shows that as of May 15th, nickel ore stocks across 14 major Chinese ports stood at 7.5999 million wet tons, showing a slight recovery from recent lows.
According to SMM, Indonesia announced the nickel ore HPM (Harga Patokan Mineral) benchmark price for the second half of May at $18,849.3 per ton, representing a 5.9% increase from the first half of the month. Following Indonesia's revision of its nickel ore benchmark pricing mechanism in mid-April, the market now primarily uses either a fixed price model or a "HPM plus a premium of $7 to $10" model. Approval progress for Indonesia's RKAB (Work Plan and Budget) this year has reached 90%. While spot supply of high-grade pyrometallurgical ore remains tight, market expectations for a looser supply environment have strengthened. On May 11th, Indonesia's Ministry of Energy and Mineral Resources announced a postponement of plans to increase mineral royalty rates and export tariffs, diminishing a previously supportive factor for nickel prices.
Steady, Slight Increase in Nickel Pig Iron Output According to Mysteel, combined nickel pig iron (NPI) production in China and Indonesia, calculated in metal content, reached 164,100 tons in April, a month-on-month increase of 5.7%. Indonesian production was 139,800 tons, showing a slight recovery from March, while Chinese output also saw a modest increase. Total production for May is expected to remain stable with a slight potential increase. On the import front, China's cumulative nickel iron imports for the first three months of the year totaled 2.5641 million tons, a year-on-year decrease of 7.8%, with approximately 96.4% of these imports originating from Indonesia. In the spot market for high-grade nickel pig iron, prices for different grades have diverged. Transaction prices for high-grade material are concentrated in the range of 1,160-1,175 yuan per nickel point (delivered, tax-included), while the negotiation range for low-grade material has been adjusted down to 1,130-1,140 yuan per nickel point. The decline for high-grade resources has been relatively smaller, while low-grade material faces greater selling pressure. Following a decline in stainless steel prices, mill profits have narrowed, leading to reduced willingness for raw material procurement. After previous concentrated inventory replenishment, raw material stocks have been supplemented, and mills are currently focused on consuming existing inventories.
Due to constraints from insufficient sulfur/sulfuric acid supply, several Indonesian nickel processing enterprises have been forced to reduce output since March. Huafei Nickel & Cobalt also initiated temporary maintenance and shutdowns for some production lines starting May 1st, which is expected to impact approximately 50% of its production. Indonesia's production of mixed hydroxide precipitate (MHP), a hydrometallurgical intermediate product, measured in metal content, fell further to 27,200 tons in April, marking a month-on-month decrease of 18.3% and a year-on-year decline of about 13.1%. Recently, sulfur/sulfuric acid prices in Indonesia have remained elevated, with the tight supply situation persisting, suggesting continued impacts on hydrometallurgical operations. From January to March this year, China's cumulative imports of nickel hydrometallurgical intermediates reached 467,800 tons (physical weight), a slight year-on-year increase of 4%, with imports from Indonesia accounting for roughly 81%.
Significant Accumulation in Domestic Refined Nickel Stocks Mysteel data shows domestic refined nickel production in China was 35,250 tons in April, down 5.6% month-on-month and 3.3% year-on-year. Affected by high raw material costs, smelter production schedules for May have been slightly reduced, and refined nickel output is expected to continue declining. Indonesia's refined nickel production in April was 9,800 tons, recovering somewhat from March, with capacity utilization rising to 78.4%.
Domestic refined nickel inventories continue to climb. The latest total nickel inventory on the Shanghai Futures Exchange (SHFE) has reached 79,889 tons, with registered warehouse receipts at 78,513 tons, indicating accelerated inventory accumulation. The premium for Jinchuan nickel over SHFE nickel futures showed signs of stabilizing after falling to low levels. As nickel prices retreated, spot market transactions improved slightly. However, selling pressure for traders remains significant, with downstream buyers primarily purchasing based on immediate needs. LME nickel inventories have generally hovered at high levels, with total stocks showing a slight decrease to around 276,000 tons. Registered warehouse receipts are fluctuating around 263,000 tons, and the cash-to-three-months spread remains in a contango of approximately $200 per ton.
Demand Remains Largely Stable In the stainless steel sector, Mysteel statistics indicate China's production of 300-series stainless steel crude steel in April was 1.96 million tons, showing a slight increase from March. Improved steel mill profits, supported by rising stainless steel prices, have led to expectations for further increases in 300-series production based on May schedules. Since April, social inventories of 300-series stainless steel have remained below 700,000 tons, indicating manageable inventory pressure. Downstream end-users mostly maintain a cautious and watchful stance, with procurement based on rigid demand remaining steady.
In the new energy sector, prices for battery-grade nickel sulfate have remained largely stable after rising in April. Supported by costs, nickel salt producers have maintained firm offers. Demand from the ternary cathode sector has shown some recovery, with some manufacturers having procurement needs for immediate production. However, as nickel prices have declined, acceptance of current nickel salt prices has weakened slightly. On the terminal side, China's production and sales of new energy vehicles in April reached 1.32 million and 1.344 million units respectively, representing year-on-year growth of 5.5% and 9.7%, with the growth rate improving compared to March. Installations of ternary batteries in April amounted to 11,500 MWh, a year-on-year increase of 23.6%.
Summary Overall, in the external environment, the non-ferrous metals sector faces some short-term pressure, with rising government bond yields in the US, Japan, and other countries sparking concerns about monetary tightening. Geopolitical tensions, such as potential escalation between the US and Iran, are supporting the US dollar and crude oil prices. On the supply and demand front, ore supply has recovered with the end of the Philippines' rainy season, diminishing the cost-supportive effect from Indonesian nickel ore. Combined high-grade nickel pig iron production in China and Indonesia remains stable with a slight increase, with prices for high-grade resources relatively firm. Constrained by sulfuric acid shortages, Indonesian production of nickel hydrometallurgical intermediates continues to shrink. China's refined nickel production is declining slightly, yet domestic nickel inventories are accelerating their accumulation, suggesting a sustained loose supply situation. Downstream, 300-series stainless steel production schedules are relatively stable, and demand from the ternary battery sector has shown slight improvement. In summary, with reduced support from the ore supply side and accumulating domestic refined nickel stocks, downward pressure has intensified. In the short term, nickel prices are likely to consolidate within a range. This analysis is for reference only.