Currently, the CIF Indonesia sulphur price has exceeded $530/mt Ni. In the smelting process of MHP, sulphur is a key auxiliary material with a unit consumption of approximately 11.8 mt. In the full cost calculation for MHP after cobalt deduction in November, the total processing cost was $10,262/mt Ni, comprising ore cost of $2,944, sulphur cost of $5,568, and cobalt credit of $4,684. The sulphur cost has now surpassed both the ore cost and cobalt credit, becoming a crucial component of MHP costs, and may further influence downstream refined nickel prices through MHP costs.
Looking ahead to the market this year, due to restricted sulphur production in Russia, mainstream Middle Eastern cargoes currently dominate. With phosphate fertiliser demand gradually being released in Indonesia, Brazil, Africa, and other countries and regions, and Indonesian MHP projects having sulphur stockpiling demand, traders' bargaining power has significantly increased under the influence of multiple factors, driving sulphur prices higher. The CIF Indonesia sulphur price has climbed from $250/mt in early March to an average price of $525/mt Ni last week.
According to SMM analysis, the average cost of MHP in November was $10,262/mt Ni, while the average cost of high-grade nickel matte was $12,797/mt Ni, resulting in a cost difference of $2,535/mt Ni.
The average price of MHP in November was $13,126/mt Ni, and the average price of high-grade nickel matte was $13,409/mt Ni, with a price difference of $283/mt Ni.
In November, the MHP-to-nickel sulphate processing fee was 15,500 yuan/mt Ni, and the MHP-to-high-grade nickel matte processing fee was 11,000 yuan/mt Ni, representing a processing fee difference of approximately $635/mt Ni.
For integrated enterprises, processing nickel sulphate using MHP costs $1,900/mt Ni less than using high-grade nickel matte, making MHP more economical as a raw material.
For enterprises purchasing raw materials externally, processing nickel sulphate using MHP costs $352/mt Ni more than using high-grade nickel matte, making high-grade nickel matte more economical as a raw material.
Based on a sulphur unit consumption of 11.8 mt per mt Ni of MHP, and assuming other factors remain constant, with the reference monthly average sulphur price in November being $476/mt, the economic viability for integrated enterprises using MHP versus high-grade nickel matte reaches parity when the sulphur price hits $637/mt. When the sulphur price exceeds $637/mt, integrated nickel sulphate producers find it more economical to use high-grade nickel matte as the raw material. When the sulphur price reaches $690/mt, the production costs for MHP and high-grade nickel matte raw material producers are equal.
If sulphur prices rise further, coupled with increasing ore costs, the rising costs of MHP and high-grade nickel matte are expected to provide cost support for downstream refined nickel products, transmitting upward pressure to nickel prices.
SMM will continue to monitor sulfur prices and their impact on the nickel industry.
