Indonesia's new nickel tariffs and Europe's CBAM have sharply raised overseas stainless steel costs, driving Asian mills to hike prices. Downstream demand remains mixed: Japan and South Korea are resilient, while the Taiwan, China region faces pressure. Wary of rapid price spikes, buyers are limiting purchases to rigid demand. The market will remain cautious until tariff details and actual demand are validated.

According to customs data, the total import volume of lithium spodumene in China from January to February 2026 was approximately 1.39 million physical tonnes: January imports reached 832,000 physical tonnes, up nearly 6% month-on-month and 41% year-on-year, equivalent to about 84,000 tonnes of lithium carbonate equivalent (LCE); February imports stood at 558,000 physical tonnes, down 33% month-on-month and approximately 2% year-on-year, equivalent to about 50,000 tonnes of LCE. Overall, the arrival volume in January reached an exceptionally high level, mainly due to the tight supply of lithium salts in the fourth quarter of 2025, which drove strong production enthusiasm among domestic lithium spodumene smelters and consequently led to a high demand for lithium ore. In February, arrivals declined due to the Chinese New Year holiday and potential vessel delays. By country of origin, Australia saw a 17% month-on-month recovery in January arrivals, significantly rebounding, supported by improved shipments from November to December 2025. However, after entering January, at the beginning of the quarter, Australian miners adopted a wait-and-see attitude toward lithium prices for the new year, leading to lower shipments. Combined with the Chinese New Year factor in February, arrivals in February decreased by 23% month-on-month. Zimbabwe entered the rainy season after October last year, resulting in a slight decline in concentrate output. Coupled with adjustments to export tax rates and the accounting period at the beginning of the year, arrivals fell by 35% and 18% month-on-month in January and February, respectively. Nigeria has seen a continuous rise in arrivals since June 2025, maintaining high levels. South Africa performed notably well, with arrivals remaining above 100,000 physical tonnes for three consecutive months from December 2025 to February 2026. In contrast, Brazil saw persistently low arrivals in January and February this year, as certain mines had not yet resumed production from October to December last year. Additionally, according to screening and analysis using the SMM model, lithium spodumene imports in January corresponded to approximately 84,000 tonnes of LCE, with lithium concentrate amounting to 636,000 physical tonnes, accounting for 76%. In February, lithium spodumene imports corresponded to 50,000 tonnes of LCE, with lithium concentrate amounting to 438,000 physical tonnes, accounting for 79%.

Since March 4, 2026, secondary copper rod has shifted to a premium of 200-400 yuan/mt against the most-traded futures contract. Meanwhile, the price difference between copper cathode rod and secondary copper rod narrowed sharply from around 1,200 yuan/mt to about 300 yuan/mt

[SMM Platinum and Palladium Weekly Review] This week (March 9–March 13), the most-traded platinum futures contract PT2606 opened at 534 yuan/gram and closed at 541.6 yuan/gram, down 15.7 yuan/gram WoW from last week’s settlement price, a decline of 2.82%. The weekly highest price was 577.85 yuan/gram, and the weekly lowest price was 522.6 yuan/gram; the most-traded palladium futures contract PD2606 opened at 408.75 yuan/gram and closed at 408.1 yuan/gram, down 13.8 yuan/gram WoW from last week’s settlement price, down 3.27% WoW from last week’s settlement price. The weekly highest price was 430 yuan/gram, and the weekly lowest price was 397 yuan/gram. Futures trading: The most-traded platinum futures contract PT2606 recorded total trading volume of 31,227 lots during the week, with total turnover of 17.368 billion yuan and open interest of 19,989 lots; open interest decreased by 1,894 lots WoW. The most-traded palladium futures contract PD2606 recorded total trading volume of 11,077 lots during the week, with total turnover of 4.616 billion yuan and open interest of 7,612 lots; open interest increased by 11 lots WoW. At present, the US–Iran conflict remained dominated by political expectations, while the reality on the ground was still unresolved. On the political-expectations front, Trump frequently released marginal de-escalation signals to curb oil prices, saying the Iran issue was only a short-term military operation and expressing willingness to engage in dialogue with Iran; the TACO trade pulled oil prices back to around 90. On the reality front, Mojtaba, son of Khamenei, formally succeeded to power, and Iran entered the “Era of Avengers,” beginning to threaten the Strait of Hormuz; its foreign minister said the new leadership would refuse to negotiate with Trump. If the US–Iran conflict continues to escalate, it will push up oil prices and trigger concerns over imported inflation in the US, thereby delaying the Fed’s progress on interest rate cuts. On tariffs, after reciprocal tariff was overturned by the Supreme Court, the Trump administration will seek a more solid legal basis to rebuild the tariff framework. The risk of re-inflation remained relatively high, and disputes over new tax rates and tax rebates lifted policy uncertainty to some extent. In the short term, Trump filled the tariff-rate vacuum through the 122 temporary tariff; in the medium and long-term, he may maintain a high-tariff framework via 232 and 301. In addition, the massive tax rebate pressure brought about after reciprocal tariff was ruled illegal will further increase the US fiscal burden, thereby reinforcing the logic of a weaker US dollar and providing support to precious metals overall. Supply side, NERSA announced it had formally approved Eskom’s electricity price adjustment plan for the next two years: electricity prices will be raised by 8.76% in April this year and raised again by 8.83% in April 2027. As South Africa’s PGM mining is highly dependent on electricity, rising electricity prices will continue to lift the cost center for platinum and palladium. The US Department of Commerce issued an announcement, making an affirmative preliminary anti-dumping determination on unwrought palladium imported from Russia, preliminarily determining the dumping margin for all Russian exporters/producers at 132.83%. In terms of valuation, watch changes in the US dollar index, which involve the relative strength of currencies such as the euro and the yen. Pay attention to details on the new administrator announced by the LME. Pay attention to the March 19 FOMC meeting, changes in economic data, and the impact of Wosh’s remarks on monetary policy expectations. The precious metals sector mainly benefited from the policy and political-environment tug-of-war during the US Fed’s midterm-election time window. From a medium- and long-term perspective, the foundation for a bull market in platinum and palladium remained intact. In the short term, be alert to the risk of a phased adjustment driven by a delay in expectations for an interest rate cut; pullbacks should be viewed as medium- and long-term opportunities to add long positions. Amid high fluctuations in platinum and palladium, pay attention to position sizing. As domestic and overseas markets are not continuous, the opening price of platinum and palladium often references the overseas night session; investors should monitor trading prices in international markets and be wary of opening gaps. Spot market, this week most traders holding cargo actively quoted prices. Some traders reported that supply was currently relatively ample while the market was relatively sluggish. Most downstream clients had sufficient inventory and mainly stayed on the sidelines, with only some downstream buyers making small, negotiated purchases to meet order demand. Along with continued cooling in investment demand, transactions were relatively difficult and price involution was severe. Overall, spot market trading this week was generally subdued.

According to the Mining Journal, the Ecuadorian government intends to implement a new mining tax aimed at bridging the fiscal gap, but it may deal a severe blow to the exploration sector. The proposed mining inspection fee (Tasa de Fiscalización Minera) is expected to generate $229 million in annual tax revenue for Ecuador, with the intention of strengthening technical and environmental monitoring of the industry. This tax applies to all levels of mining activities, except for small-scale mining. The Ecuadorian Mining Chamber (CME) has strongly criticized this move, stating, "This matter was never consulted with the industry, and we believe it represents a significant technical obstacle to the responsible and sustainable development of the mining sector." While acknowledging the need for enhanced state control and industry regulation, the CME has criticized the structure of the tax. It is levied per hectare, with different tax rates for projects at various stages. The CME claims, "For medium-to-large-scale mining projects, especially those in the exploration phase, this approach is not feasible." The final tax amount may exceed the exploration investment of the project, the CME added. "This makes regulation an obstacle rather than a tool." Ecuador's largest mining projects include Lundin Gold's Fruta del Norte gold mine and EcuaCorriente's Mirador copper-gold mine. Exploration The CME has also criticized the new tax for imposing additional financial burdens on non-revenue-generating exploration companies, which are in the most vulnerable growth phase. "Although we understand that, as an administrative fee, it does not require formal legal authorization, it must adhere to the constitutional principles of appropriateness, reasonableness, and equality. From its design, this fee is unrelated to the cost of the services it provides or the economic capacity of taxpayers, and it may have an extraordinary impact on exploration activities," the CME stated. The CME's analysis indicates that this fee will make Ecuador less competitive in exploration compared to other Latin American countries. Ecuador's fee is $11.5 per hectare, while Colombia's is $6.7, Chile's is $4.5, and Peru's is $3. "Ecuador is the most expensive country for exploration in the region, and the new tax makes this difference even more pronounced," the CME said. In 2024, exploration investment in Ecuador was $67 million, compared to $493 million in Argentina, $568 million in Peru, and $637 million in Chile. In other aspects, the cost of mine construction in Ecuador is relatively high. Although the country provides mining investors with the ability to sign investment protection agreements, thereby stabilizing their financial situations, its mining law adopts a floating royalty rate that varies between 3% and 8% depending on changes in metal prices. Under the current gold and copper prices, mining companies are facing the situation of the highest royalty rate.

More and more Wall Street investment banks have recently reiterated their forecasts that the US dollar will weaken further due to interest rate cuts, a slowdown in economic growth, and the trade and tax policies of US President Trump. Morgan Stanley has stated that the dollar will fall to its lowest level during the COVID-19 pandemic by the middle of next year; JPMorgan Chase is similarly bearish on the dollar; Goldman Sachs has indicated that if tariff measures are blocked, Washington's efforts to seek alternative sources of revenue could have an even more negative impact on the dollar. "We believe that a medium-term narrative around dollar depreciation is taking shape," said Aroop Chatterjee, a strategist at Wells Fargo in New York. On Monday, amid escalating global trade tensions, the dollar fell against all G10 currencies once again. Currently, the ICE US Dollar Index has accumulated an 8.9% decline year-to-date. According to Dow Jones Market Data, this represents the worst performance for the index in the first five months of the year on record. The Traditional Carry Trade Logic Has Been Upended It is worth noting that one of the most striking aspects of the dollar's continued weakness this year is the near disappearance of the traditional carry trade logic in the foreign exchange market. Due to President Trump's erratic policies, investor interest in US assets has cooled, and the traditional close relationship between US Treasury yields and the dollar has broken down. In the past, the movement of long-term US Treasury yields, which measure government borrowing costs, tended to move in tandem with the dollar exchange rate, with higher yields typically indicating a strong economy and attracting foreign capital inflows. However, since Trump announced his "Liberation Day" tariffs in early April this year, the 10-year US Treasury yield has risen from 4.16% to 4.42%, yet the dollar has declined by 4.7% against a basket of currencies. Last month, the correlation between the dollar exchange rate and US Treasury yields fell to its lowest level in nearly three years. Shahab Jalinoos, head of G10 FX strategy at UBS Group, said, "Under normal circumstances, a rise in US Treasury yields indicates a strong US economy. This is attractive for capital inflows into the US." However, he also noted that "if yields rise due to higher US debt risks, fiscal concerns, and policy uncertainty, then the dollar will weaken simultaneously. This pattern is actually quite common in emerging markets." And currently, the situation facing the dollar is undoubtedly the latter. Trump's aggressive push for the "Big Beautiful Bill" could exacerbate the US budget deficit, coupled with Moody's recent downgrade of the US sovereign credit rating, has made investors more concerned about the sustainability of the deficit and has placed severe pressure on US Treasury prices. Analysis by Torsten Sløk, chief economist at Apollo, shows that the credit default swap (CDS) spreads of the US government—a trading level reflecting the cost of hedging against loan default risks—are now similar to those of Greece and Italy. These two countries were once the "epicenters" of the European debt crisis. Trump's attacks on Fed Chairman Jerome Powell have also unsettled the market. He met with Powell last week and told the Fed Chairman that it was a mistake not to have implemented an interest rate cut so far this year. The US dollar has significant downside room. Michael de Pass, global head of interest rate trading at Citadel Securities, said, "In the past, the strength of the US dollar was partly derived from the integrity of its institutions: the rule of law, the independence of the central bank, and the predictability of policies. These factors made the US dollar a reserve currency." But he added, "In the past three months, these have all become issues. A major concern in the market currently is that the institutional credibility of the US dollar is being eroded." The divergence between US Treasury yields and the US dollar indicates that the market's traditional carry trade pattern has changed significantly in recent years—when expectations about the direction of monetary policy and economic growth were key drivers of government borrowing costs and exchange rate movements. Andreas Koenig, global head of foreign exchange at Allianz Global Investors, said that the new pattern may increase the risks faced by investors seeking safe-haven assets. He said, "This changes everything. In the past few years, holding long positions in the US dollar in a portfolio had been a very good stabilizing factor. When the US dollar was a stabilizing factor, you had a stable portfolio. But if the US dollar suddenly becomes correlated with other asset classes, that increases risk." Open interest data from the US Commodity Futures Trading Commission shows that market participants' bearish sentiment toward the US dollar is still far from extreme levels, underscoring that the US dollar may still face significant downward pressure in the future. JPMorgan strategists led by Meera Chandan strengthened their negative view on the US dollar last week, instead recommending bets on the Japanese yen, euro, and Australian dollar. Morgan Stanley also listed the euro, yen, and Swiss franc as the biggest winners from a US dollar decline. Skylar Montgomery Koning, currency strategist at Barclays, said that the US dollar's headwinds may come from further weakness in the bond market, an escalation of trade wars, and weak US data. Paresh Upadhyaya, head of foreign exchange strategy and portfolio manager at Amundi Pioneer Asset Management, expects that the Bloomberg Dollar Index will depreciate by another 10% over the next 12 months. "Capital Tax" Adds Insult to Injury For Goldman Sachs, another major risk that could further exacerbate the outlook for the US dollar is Trump's potential "next move" against foreign enterprises and investors—namely, the "Section 899" of the "Grand Beautiful Bill" mentioned by many market participants last week. As Caixin reported last week, this section would allow the US to impose additional taxes on enterprises and investors from countries deemed to have punitive tax policies. In other words, if a country is identified by the US Treasury Department as engaging in "unfair taxation," entities from that country—including enterprises, residents, and even overseas controlled companies held by these individuals or enterprises—may face higher tax rates on their investments and business activities within the US. Goldman Sachs strategists, including Kamakshya Trivedi and Michael Cahill, wrote in a report that even though the scope of application of this tool is relatively narrow, at a time when investors are already viewing the shift in cross-asset correlations as a reason to avoid US assets and seek greater diversification, such tools will still exacerbate investors' concerns about US investment risks. In another report, Goldman Sachs strategists stated that their models indicate the US dollar is overvalued by about 15%, suggesting there is further downside room. They added that this decline could be driven by the reallocation and repricing of global assets. Goldman Sachs strategists believe that investors should prepare for a weaker US dollar—especially depreciation against the euro, yen, and Swiss franc, which have all appreciated in recent months. They also pointed out that these new risks provide a strong rationale for allocating some funds to gold. Matthew Hornbach, global head of macro strategy at Morgan Stanley, also said in a media interview on Monday, " Investors outside the US are reevaluating their exposure to the US —both in terms of asset holdings and the currency risk exposure associated with these asset holdings. They have increased their hedging ratios, which is one of the factors contributing to downward pressure on the US dollar over the next 12 months." The bank forecasts that the US dollar index will fall by about 9%, reaching 91 by this time next year. Shahab Jalinoos, a strategist at UBS, pointed out, "The greater the policy uncertainty, the more likely investors are to increase their hedging ratios. If hedging ratios increase based on the existing stock of US dollar assets, this could lead to billions of dollars in selling." "

The Fourth Batch of the Third Round of Central Ecological and Environmental Protection Inspections Fully Launched Approved by the CPC Central Committee and the State Council, the Fourth Batch of the Third Round of Central Ecological and Environmental Protection Inspections has been fully launched. Eight central ecological and environmental protection inspection teams will carry out inspections in five provinces (autonomous regions), namely Shanxi, Inner Mongolia, Shandong, Shaanxi, and Ningxia, coordinating inspections of the Yellow River Basin and provincial inspections. Meanwhile, they will also conduct inspections on three central state-owned enterprises, namely China Huaneng Group, China Datang Corporation Limited, and SPIC, with an on-site inspection period of approximately one month.

Foreign Ministry spokesperson Lin Jian hosted a regular press conference on May 13. A reporter from Agence France-Presse asked whether the spokesperson could provide detailed information on the next phase of China-US economic and trade talks, and whether there were plans to discuss the 20% special tariff imposed by the US on Chinese exports on the grounds of fentanyl. Lin Jian stated that regarding the high-level economic and trade talks between China and the US, the competent Chinese authorities had already released information. On the issue of fentanyl, China had repeatedly made it clear that fentanyl was a US issue, not a Chinese one, and that the responsibility lay with the US itself. The US had ignored China's goodwill and unreasonably imposed fentanyl tariffs on China, which had severely impacted China-US dialogue and cooperation in the field of drug control and also seriously harmed China's interests. "If the US truly wants to cooperate with China, it should stop smearing and shifting blame onto China and engage in dialogue with China in an equal, respectful, and mutually beneficial manner," Lin Jian said.

Overnight Stock Market The easing of trade tensions boosted market sentiment, leading to significant gains in the US stock market on Monday (May 12). The Nasdaq rose by 4.35%, the S&P 500 by 3.26%, and the Dow Jones by 2.81%. The Nasdaq Golden Dragon China Index surged by 5.40%, reaching a new high since April 4. All three major European stock indices closed higher. The French CAC 40 rose by 1.37%, the German DAX by 0.29%, and the UK's FTSE 100 by 0.59%. Commodity Markets International crude oil futures settlement prices rose by over 1.5%. June WTI crude oil futures closed up by $0.93, or 1.52%, at $61.95 per barrel. July Brent crude oil futures rose by 1.64% to $64.96 per barrel. COMEX gold futures fell by 2.76% to $3,240.1 per ounce, while COMEX silver futures dropped by 0.42% to $32.775 per ounce. Citi expects gold to consolidate in the range of $3,000-3,300 per ounce in the coming months. Russia-Ukraine Conflict Updates [Russian and Turkish Foreign Ministers Discuss Russia-Ukraine Negotiations] The Russian Foreign Ministry announced on the 12th that Foreign Minister Lavrov had a phone conversation with his Turkish counterpart, Mevlüt Çavuşoğlu, to discuss President Putin's proposal to begin direct negotiations between Russia and Ukraine on the Ukraine crisis in Istanbul, Turkey, on the 15th. [Several European Countries Issue Joint Statement Supporting Ukraine's 30-Day Ceasefire Call] According to the UK government, foreign ministers from the UK, France, Germany, Italy, Poland, Spain, and a senior EU representative met in London to discuss the Ukraine issue and strengthen regional defense cooperation. After the meeting, the participating countries issued a joint statement saying, "The participating countries, together with Ukraine, call for an immediate, comprehensive, and unconditional 30-day ceasefire to create space for negotiations on a just, comprehensive, and lasting peace." [Zakharova: Western Support for Ukraine's 30-Day Ceasefire Call Aims to Help It Regroup Militarily] Russian Foreign Ministry spokesperson Maria Zakharova stated on the 12th local time that Western countries' aim in achieving a 30-day ceasefire between Russia and Ukraine is to give Ukraine a respite to restore its military potential and continue its confrontation with Russia. [Zelensky Approves US-Ukraine Mineral Agreement] The Ukrainian presidential website announced that President Zelensky had signed a law approving the "Agreement on the Establishment of the US-Ukraine Reconstruction Investment Fund." [Poland Demands Closure of Russian Consulate General in Krakow by Month-End, Russia Vows Retaliation] On the afternoon of May 12th local time, the Polish Foreign Ministry delivered a diplomatic note to the Chargé d'Affaires of the Russian Embassy in Poland, Andrey Ordash, regarding the revocation of the operating permit for the Russian Consulate General in Krakow.Ordaz stated that Poland's accusations against Russia were absurd and baseless, and that Russia would certainly take retaliatory measures. Other market news [Guterres Welcomes Positive Outcomes of High-Level Sino-US Economic and Trade Talks] When answering a question from a CCTV reporter, Stéphane Dujarric, the Spokesperson for the Secretary-General of the United Nations, said that UN Secretary-General António Guterres welcomed the outcomes of the talks between China and the US in Geneva. Dujarric stated that the UN welcomed the direct dialogue on trade between China and the US held in Switzerland, which was a very positive signal for the world economy. Dujarric emphasized that trade wars must not escalate and that all parties need dialogue. Dujarric reiterated that Guterres had made it clear that no one would win in a trade war, and that the concept of "decoupling" was one of the issues that concerned him greatly, which he had expressed on multiple occasions. Therefore, this was undoubtedly a good start. [EU Welcomes Important Consensus Reached in High-Level Sino-US Economic and Trade Talks] Regarding the substantive progress and important consensus reached in the high-level Sino-US economic and trade talks, Eric Mamer, the Spokesperson for the European Commission, said on the 12th that the EU welcomed this. The EU hopes to reduce trade barriers and welcomes measures that contribute to the smooth operation of the global supply chain, as well as measures that support the stability and predictability of global trade and investment. [Republican Tax Draft in the US House of Representatives: Raises Debt Ceiling by $4 Trillion, Omits Proposal for Tiered Taxation on Million-Dollar Incomes] The Republican Party in the US House of Representatives released the text of a tax legislation draft, proposing tax cuts exceeding $4 trillion over the next decade while cutting spending by at least $1.5 trillion. According to reports, the bill also seeks to raise the national debt ceiling by $4 trillion, which is lower than the $5 trillion level favored by the Senate. After weeks of debate among Republicans on whether to raise tax rates for millionaires, the proposal does not include tax increases for the wealthiest Americans. The bill would permanently extend the 37% top individual tax rate set in Trump's 2017 tax law, despite Trump telling House Speaker Mike Johnson last week that he wanted to impose a 39.6% tax rate on individuals earning more than $2.5 million. [CMS Releases Draft Guidance on the Third Round of Medicare Drug Price Negotiation Program] The US Centers for Medicare & Medicaid Services (CMS) released draft guidance on the third round of the Medicare Drug Price Negotiation Program. The guidance includes policies to improve negotiation transparency, prioritize high-cost prescription drugs for inclusion in Medicare, and minimize the negative impact of negotiated fair maximum prices on US drug innovation. [US Fed Governor Kugler: Inflation Rate Still Above the US Fed's 2% Target] US Fed Governor Kugler stated that the inflation rate remains above the US Fed's 2% target. The inflation rate for non-housing market services remained at 3.4% in March, indicating persistent inflationary pressures. [Fire Breaks Out at a Property Owned by UK Prime Minister Starmer] At around 1:30 a.m. local time on the 12th, a fire broke out at a property owned by UK Prime Minister Starmer in north London. The fire has since been extinguished by the fire brigade, and the police stated that no one was injured. The specific cause of the incident is still under investigation. A spokesperson for the UK Prime Minister's Office said, "The Prime Minister expresses gratitude for the work of the emergency services. As the on-site investigation is still ongoing, the Prime Minister's Office will not make further comments." Local media reported that Starmer's property is currently being rented out. [CK Hutchison Issues Statement in Response to Port Transaction: It Will Never Be Conducted Under Any Illegal or Non-compliant Circumstances] CK Hutchison Holdings Limited announced that it had originally planned to discuss the port transaction at the annual general meeting of shareholders on May 22. However, in light of the continuous inquiries from shareholders and the media in recent days, CK Hutchison Holdings Limited hereby states: This transaction will never be conducted under any illegal or non-compliant circumstances. The relevant provisions have been clarified in the announcement dated March 4, 2025: "The completion of the transaction depends on the fulfillment of a series of conditions, including the consent and approval of legal and regulatory authorities, the absence of any illegal or prohibited circumstances, obtaining the necessary approval from the company's shareholders, and other appropriate and customary conditions as agreed in the final documentation."

After a sharp decline on the first day after the holiday, SHFE nickel returned above 120,000 as shorts took profits and exited the market. Futures prices then steadily rebounded, gradually filling the previous gap. Indonesia has announced a new policy on nickel product royalties. What impact will this have on the nickel market? How should we view Indonesia's multiple policy adjustments this year? What is the current supply and demand situation for nickel? What factors in the fundamentals are worth paying attention to? After consecutive rebounds, does SHFE nickel still have room for further upside? Webstock Inc.'s [Institutional Diagnosis] section invites SHFE nickel futures experts to provide in-depth insights. [Institutional Diagnosis]: Indonesia has announced a new policy on nickel product royalties. What impact will this have on the nickel market? How should we view Indonesia's multiple policy adjustments this year? Gu Jing, Senior Analyst at Yide Futures Investment Consulting Department: The increase in tax rates for raw materials and smelting products directly raises production costs. Based on the HMA price of nickel at $15,534.62/mt in the second period of March 2025, the cost of nickel ore with a grade of 1.6%-2.0% will increase by $1.1-1.8/wmt. Assuming the rise in mining costs is fully passed on to smelting, coupled with the increase in smelting tax rates, the cost of NPI will rise by $420/mt (metal content), and the cost of nickel matte will increase by $411/mt (metal content). The cost of MHP using low-grade nickel ore remains unaffected. After nearly two years of surplus, nickel prices have been fluctuating at the bottom. As the world's largest supplier of nickel, Indonesia has recently introduced multiple policies aimed at helping nickel prices break out of the low valuation range, ensuring more rational use of nickel resources, and thereby increasing domestic tax revenue. Jiang Xinbin, Senior Metal Analyst at Zheshang Futures Research Center: Indonesia's nickel product royalty policy has recently been implemented. The core of this policy is to implement a progressive tax rate increase for products at various stages of the nickel industry chain. The new policy significantly raises the tax burden on nickel ore and its downstream products, directly lifting the cost center of the nickel industry chain and supporting nickel prices: based on the current HMA, the royalty for nickel ore has been increased from a fixed 10% to 14%, potentially driving NPI costs up by $180-200/mt. In 2025, Indonesia has frequently introduced policies, from the SIMBARA system and HMA price adjustments to the new royalty policy. Behind these moves is not only Indonesia's long-term strategy to enhance resource revenue and strengthen the voice of related industries but also a stopgap measure by the Indonesian government to cope with the huge costs of Prabowo's "flagship project." Xia Peng, Head of Nonferrous and New Energy Group at Chuangyuan Futures Research Institute: The Indonesian government's 2025 Government Regulation No. 19 is an update based on the 2022 Regulation No. 26, mainly increasing the cost of nickel ore usage, with the royalty levied only once during the industry chain process. The royalty rate for nickel ore with a grade below 1.5% remains at 2%, while the rate for ore above 1.5% has been increased from 10% to 14%-19% (with progressive increases based on different HMA nickel prices). The impact on nickel prices is mainly reflected in the upward shift in costs. As a resource-exporting country, the new Indonesian government, which took office last October, has adjusted its mineral policies primarily to alleviate fiscal pressure. [Institutional Diagnosis]: What is the current supply and demand situation for nickel? What factors in the fundamentals are worth paying attention to? Gu Jing, Senior Analyst at Yide Futures Investment Consulting Department: On the supply side, the rainy season in the main mining areas of the Philippines has ended, and ore output has seasonally rebounded, with a noticeable increase in ship departures, up YoY. The import of Philippine ore to Indonesia has significantly increased, easing the tight ore supply in the later period. Indonesian NPI smelting production remains high, while high-grade nickel matte production stays low due to tight high-grade ore supply, and MHP production remains high. Domestic refined nickel production also maintains a high schedule. On the demand side, the cumulative YoY decline in ternary power battery installations is significant, leading to reduced demand for high-grade nickel matte and MHP. The recent implementation of new battery standards has constrained end-use consumption, making it difficult to drive up intermediate product prices through downstream orders in the short term. In the stainless steel sector, both 200-series and 300-series production remain high, with nickel consumption maintaining a high growth rate of over 10%. However, stainless steel inventory pressure is expected to be significant in the later period. Overall, the nickel industry remains in a surplus. The recent implementation of Indonesia's tax policies has provided strong support for prices, and future attention should be paid to whether there will be any unexpected performance on the demand side. Jiang Xinbin, Senior Metal Analyst at Zheshang Futures Research Center: On the supply side, the hype around Indonesia's BNBP policy for nickel ore has subsided, and the imminent resumption of production by major nickel pig iron (NPI) producers continues to tighten supply in Indonesia, with high domestic trade premiums supporting ore prices. In terms of primary nickel, domestic smelters have low nickel ore inventories, and some companies are still in maintenance periods, keeping overall NPI production low. Indonesian NPI production remains high in April, and the pullback in nickel prices has driven the conversion of high-grade nickel matte back to NPI, likely extending the surplus. Recent MHP production cuts are expected to marginally tighten refined nickel supply. Overall, Indonesia's nickel supply remains relatively loose. On the demand side, stainless steel demand is recovering slowly, with a slow destocking pace, and traders are pessimistic about future orders, indicating a generally weak demand. Future supply-side attention should focus on the shipping pace of Philippine nickel ore and Indonesia's domestic nickel ore trade, while demand-side attention should be on stainless steel inventory and order dynamics. Xia Peng, Head of Nonferrous and New Energy Group at Chuangyuan Futures Research Institute: From a fundamental perspective, the current supply and demand situation in nickel smelting remains challenging. As of April 17, LME refined nickel inventory stood at 204,500 mt, the highest since September 2021. Last Friday, SMM reported domestic refined nickel social inventory at 43,300 mt, indicating no shortage of refined nickel, the trading target in the futures market. The main point of contention since the Chinese New Year has been the disruptions in Indonesian nickel ore supply. In 2024, Indonesia accounted for 60% of global primary nickel production, showing a high concentration. Moreover, MHP capacity in the smelting sector continues to expand, making nickel ore relatively scarce compared to smelting capacity. The anchor for futures pricing lies in the ore sector. Last year, the slow issuance of RKAB in Indonesia, combined with low smelter ore inventories, the rainy season, and the Indonesian Ramadan in March, created a short-term supply-demand mismatch, driving nickel ore prices and subsequently nickel prices slightly higher. As we approach May, seasonal recovery in nickel ore supply from Indonesia and the Philippines may slightly ease the tight ore supply, with a focus on nickel ore price changes. [Institutional Diagnosis]: After consecutive rebounds, does SHFE nickel still have room for further upside? Gu Jing, Senior Analyst at Yide Futures Investment Consulting Department: Currently, with the easing of macro sentiment, the LME market has fully recovered from the decline caused by reciprocal tariffs, and the market has already reacted to the adjustment of Indonesia's PNBP tax rates. The current surplus continues, with high inventory levels exerting downward pressure. We believe that further upside in the futures market will require further improvement in the supply and demand fundamentals. Jiang Xinbin, Senior Metal Analyst at Zheshang Futures Research Center: After the Qingming Festival, SHFE nickel prices rebounded from low levels, approaching the middle of the previous trading range. From a fundamental perspective, on the supply side, although the implementation of Indonesia's nickel product royalty policy has pushed the price center higher, the overall supply of primary nickel remains rigidly growing, with high inventory pressure for Class 1 nickel still present. On the demand side, stainless steel is significantly dragged down by weak end-use consumption in real estate and infrastructure, with cautious market procurement and pessimistic order expectations making it difficult to form strong support. Overall, the global nickel market remains in a supply-demand surplus, and SHFE nickel's upside room for continued rebound in the short term is limited, with sideways movement expected. Attention should be paid to changes in Indonesia's industrial policies and the macro environment. Xia Peng, Head of Nonferrous and New Energy Group at Chuangyuan Futures Research Institute: This year, we have been closely monitoring changes in Indonesia's mineral policies, particularly whether there will be adjustments to nickel ore quotas. Information from the Indonesian Nickel Association shows that the Indonesian government has allocated 298 million mt of nickel ore quotas for 2025, which is estimated to meet the nickel ore consumption for 2025 based on this year's smelting production. Global primary nickel supply and demand remain in surplus. However, since December last year, government officials have repeatedly stated in public that they plan to reduce this year's nickel ore quotas to stabilize nickel prices. If the quota is cut to 220 million mt as suggested by the Ministry of Energy and Mineral Resources officials at the end of February, the global primary nickel supply and demand will completely reverse this year, shifting from surplus to shortage. Over the past decade, the Indonesian government has adjusted its mineral policies multiple times, making it difficult to predict future policy directions. It is recommended to closely monitor changes in Indonesian nickel ore prices.