The MHP market was tight overall this week, with nickel and cobalt payables staying high. On the supply side, after the strait reopened, production at some producers recovered somewhat but remained below previous levels, and quotes stayed high under cost pressure. On the demand side, mid-year downstream nickel and cobalt salt prices showed weakness, and producers faced significant pressure from losses. Salt producers had relatively low acceptance of high-priced MHP, putting pressure on MHP payables. Given weak downstream product prices, MHP payables may pull back in the short term. The high-grade nickel matte market also saw supply-demand weakness on both sides. High-grade nickel matte currently has a clear cost advantage over MHP, but on the supply side, major producers have already signed long-term contracts, leaving limited available spot supply. On the demand side, actual consumption capacity is insufficient due to restrictions in matching downstream production lines. Overall purchasing sentiment was weak, trading activity was low, and payables remained stable. The geopolitical premium in the international sulfur market is gradually being cleared, but supply-side disruptions have intensified. The US-Iran agreement stipulates that the Strait of Hormuz will be unblocked within 30 days, and the resumption of navigation will be a gradual process. Kazakhstan indefinitely suspended sulfur exports from June 27 (only allowed to sell to Russia). Russia extended its export ban to the end of 2026, and Turkey's ban lasts until end-September, compounding short-term supply disruptions. Medium and long-term sulfur prices are expected to be under pressure, but the recovery of supply has a time lag, and prices will swing wildly at highs. Regarding nickel prices, market expectations for interest rate hikes continued to mount at the start of this week, and nickel prices continued to decline. On Thursday, non-farm payrolls data came in below expectations, prompting some recovery. Against a backdrop of lower MHP payables and stable high-grade nickel matte payables, the absolute prices of MHP and high-grade nickel matte edged down along with nickel prices. In addition, MHP cobalt prices and refined cobalt prices also declined. Overall, the intermediate product market will be under pressure in the short term.

Nickel prices consolidated at lows and hit bottom this week. Early in the week, expectations for further US Fed interest rate hikes and a stronger US dollar weighed on the most-traded SHFE nickel contract, keeping it under pressure around 124,000 yuan/mt. Mid-week, US June non-farm payrolls data significantly missed expectations, triggering a sharp reversal in macro sentiment. Rate hike expectations cooled abruptly, the US dollar index pulled back quickly, and nickel prices rebounded slightly, leaving the weekly decline at 1.2%. The LME nickel 3M contract also traded under pressure this week, breaching the $17,000 level and falling nearly 2% WoW. In the spot market, SMM #1 refined nickel averaged 127,080 yuan/mt this week, down 4,500 yuan/mt WoW. Jinchuan nickel premiums trended higher this week, climbing to around 2,200 yuan/mt, while mainstream electrodeposited nickel discounts held steady in the 400-400 yuan/mt range. On spot transactions, the sustained drop in nickel prices encouraged bargain-hunting by end-users, but after some downstream players had already stockpiled during the earlier price decline, overall weekly trading activity was moderate. On the macro front, US Labor Department data on July 3 showed that non-farm payrolls increased by only 57,000 in June, roughly half the 113,000 expected and well below the downwardly revised 129,000 for May. The sharper-than-expected cooling in non-farm payrolls data prompted a more cautious assessment of the employment outlook and led investors to re-evaluate the Fed’s monetary policy path. Rate hike expectations cooled markedly, the US dollar index fell to a two-week low, and the US Treasury yield curve steepened steadily. Inventory side, bonded zone inventory in Shanghai stood at around 2,700 mt, flat WoW. China’s social inventory stood at approximately 130,000 mt, a WoW buildup of about 1,100 mt. Nickel prices are currently caught between macro disruptions and weak industry fundamentals. In the short term, recovering macro sentiment supports a rebound, but the upside is still capped by high inventory pressure. The most-traded SHFE nickel contract is expected to trade in a core range of 125,000-135,000 yuan/mt next week.

[SMM Nickel Flash] July 3 – According to SMM, the price spread between different NPI grades has been restored currently. With the continued decline in nickel prices, the cost-effectiveness disadvantage of high-grade NPI material has become prominent, steel mills' procurement preferences have shifted, and the acceptance of high-nickel-unit material has continued to decline, leading to a narrowing of the price spread between high- and low-grade materials.

[SMM Stainless Steel Daily Review] SS Consolidates Amid Persistent Macro News Disturbances; Stainless Steel Spot Prices Remain Firm in Off-Season with Sluggish Trading According to SMM on July 3, SS futures presented an overall pattern of holding up well. US non-farm payrolls data came in below expectations and inflation expectations declined, prompting non-ferrous metals to strengthen overall. SS followed suit and rose in tandem. As of the midday close, the most-traded SS contract settled at 14,600 yuan/mt. In the spot market, the decline in SS futures paused temporarily, while current social inventory pressure on stainless steel was not significant. With steel mills holding prices firm, spot offers remained firm. Most-traded SS futures contract. At 10:15 AM, SS2608 was quoted at 14,655 yuan/mt, up 75 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were in the range of 315-865 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi remained unchanged; cold-rolled 304/2B mill edge coils, average prices in Wuxi and Foshan both held flat; cold-rolled 316L/2B coil prices in Wuxi were flat; hot-rolled 316L/NO.1 coil quotes in Wuxi were unchanged; cold-rolled 430/2B coils in Wuxi and Foshan fell 50 yuan/mt. This week, the tug-of-war between macro and industrial logic dominated the futures trend. US inflation data pulled back, market expectations for US Fed interest rate hikes further cooled, and the US dollar index weakened, overall boosting valuations of commodities and non-ferrous metals and providing macro support for the metals sector. However, sentiment on the industrial side remained bearish, the issue of Indonesia's nickel ore supplementary quotas remained unresolved, and the market held relatively...

As of the latest data, the FOB price of Indonesian MHP nickel is $15,017/mt Ni, and the FOB price of Indonesian MHP cobalt is $50,496/mt Co. The MHP payables (against the SMM battery-grade nickel sulphate index) are 80-81, and the MHP cobalt payable indicator (against SMM refined cobalt, Rotterdam warehouse) is 95. The FOB price of Indonesian high-grade nickel matte is $15,143/mt Ni.

On July 3, the SMM battery-grade nickel sulphate average price edged lower.

SMM Nickel, July 3: Macro and Market News: (1) US nonfarm payrolls increased by 57,000 in June, below market expectations of a 110,000 rise. Payroll gains for April and May were revised down by a combined 74,000. (2) On Friday, the US dollar was on track to post its biggest weekly decline in nearly three months, as the sharp slowdown in US job growth in June prompted traders to scale back expectations for near-term US Fed interest rate hikes. The market now sees a 52% chance of a rate hike at the September meeting, down from 64% in the previous session. Spot Market: On July 3, SMM #1 refined nickel price rose 1,800 yuan/mt from the previous trading day. In terms of spot premiums, the average premium for Jinchuan #1 refined nickel was 2,250 yuan/mt, up 100 yuan/mt from the previous trading day, while the range for domestic mainstream brand electrodeposited nickel was -400 to 400 yuan/mt. Futures Market: The most-traded SHFE nickel 2609 contract surged to the 128,000 yuan level in early trading before pulling back slightly, and ended the morning session at 127,190 yuan/mt, up 0.59%. The surprisingly weak US nonfarm payrolls report prompted more cautious views on the job market outlook, significantly cooling expectations for US Fed interest rate hikes. The sharp decline in the dollar provided a catalyst for a rebound in nickel prices. In the short term, nickel prices are expected to remain in the doldrums within the range of 125,000-135,000 yuan/mt.

[SMM Cobalt Lithium Morning Meeting Minutes: This week, overall sentiment in the industry chain recovered, as a rebound in upstream raw material prices drove some material prices higher. Lithium carbonate, LFP, and separator segments performed strongly. Downstream production schedules stayed high, with demand from energy storage, commercial vehicles, and power batteries still providing support. However, acceptance of high prices was limited, and actual transactions were mostly based on essential needs. Cobalt salts, nickel salts, and ternary cathode precursors remained in the doldrums, with a strong wait-and-see sentiment prevailing in the market. Overall, short-term prices may continue to drift higher, but attention still needs to be paid to raw material arrivals, the sustainability of restocking, and the realization of end-use demand going forward.]

[7.3 Morning Meeting Minutes] US June ADP employment increased by 98,000, the smallest gain since March and below market expectations of 118,000. The most-traded SHFE nickel 2609 contract moved sideways in morning trading, closing the session at 125,880 yuan/mt, down 0.41%. A stronger US dollar and a shift in market expectations toward a more "hawkish" US Fed policy stance kept the macro environment challenging. Markets turned their attention to this week's US ADP and non-farm payrolls data. In the short term, nickel prices are expected to trade in the doldrums within the range of 125,000-135,000 yuan/mt.

As of now, the FOB price of Indonesian MHP nickel is $15,127/mt Ni, and the FOB price of Indonesian MHP cobalt is $50,716/mt Co. MHP payables (against SMM battery-grade nickel sulphate index) are 80.5-81.5, and MHP cobalt payables (against SMM refined cobalt (Rotterdam warehouse)) is 95. The FOB price of Indonesian high-grade nickel matte is $15,254/mt Ni.