The most-traded SHFE nickel 2609 contract plunged in early trading on August 17, closing the morning session at 127,300 yuan/mt, down 1.12%, according to Shanghai Metals Market (SMM) morning meeting minutes. This decline occurred as market sentiment weakened following the release of mild US July Producer Price Index data, which cooled expectations for Federal Reserve interest rate hikes in September. The downward pressure on nickel prices intensified following the Indonesia Nickel Miners Association (APNI) proposal to maintain the 2026 nickel ore RKAB at 270 million wmt while adding a 30 million mt strategic buffer, potentially reaching 300 million wmt.
APNI justified the proposal by noting that approximately 80 nickel smelting facilities operating at full capacity would require about 315 million wmt of nickel ore annually. The market interpreted the potential quota increase as a bearish signal for near-term price support. Analysts projected the SHFE nickel contract price range at 125,000-130,000 yuan/mt in the short term, with prices described as being in the doldrums.
In the spot market, the SMM average price of number one refined nickel was 127,800 yuan/mt on August 14, down 950 yuan/mt from the previous trading day. Spot premiums for Jinchuan number one refined nickel averaged 1,400 yuan/mt, up 150 yuan/mt from the prior session. The broader nickel market faced headwinds from multiple bearish factors.
Battery-grade nickel sulphate prices declined, with overall market activity described as mediocre mid-month. Downstream enterprises maintained cautious purchasing behavior, relying on long-term contracts and existing inventory rather than spot procurement. Supply-side dynamics showed MHP payables and auxiliary material prices at elevated levels, with some smelters holding firm on prices while others with high inventory levels sought to destocking.
The market was expected to remain dominated by destocking through month-end. High-grade nickel pig iron (NPI) markets showed significant weakness. The SMM 10-12% high-grade NPI average price fell week-on-week by 2.8 yuan per nickel unit to 1,133 yuan per nickel unit ex-factory including tax.
The average Indonesia NPI FOB index price increased by $0.13 per nickel unit to $146.52 per nickel unit. Spot market transactions remained limited, with suppliers maintaining relatively high quotes despite constrained actual shipments. Mainstream steel mills had completed peak-season stockpiling, reducing procurement pace significantly.
The market faced a clear price spread between acceptable levels and supplier quotes, with low acceptance of high-priced cargo. High-grade NPI faced short-term pressure as futures weakened and market confidence loosened. Philippine nickel ore prices remained overall steady, with mainstream CIF China quotations at $46/wmt for Ni 1.3%, $56.5/wmt for Ni 1.4%, and $64.5/wmt for Ni 1.5%, all unchanged week-on-week.
Typhoon disruptions affected some production areas with localized delays to vessel schedules and loading pace, but overall impacts were described as relatively limited, with Philippine nickel ore supply remaining generally sufficient. Freight rates on major routes remained unchanged. Indonesia's nickel ore market maintained ample supply.
The latest HMA pricing cycle for the first half of August was at $16,646/mt. CIF prices for limonite were approximately $29/wmt for Ni 1.2% and $31/wmt for Ni 1.3%, with saprolite at approximately $52.6/wmt for Ni 1.4% and approximately $60/wmt for Ni 1.5%. Mainstream transaction prices for low-grade nickel ore were about $31/wmt.
Most smelter inventories remained sufficient for approximately two months of operations, reducing immediate spot purchase needs. The stainless steel market pulled back on overall weakness driven by macro sentiment and bearish factors including repeated changes in Indonesia's nickel ore approvals and geopolitical conflicts. Steel mill production schedules increased in August, raising supply and demand pressure, though Typhoon Baihaitun temporarily disrupted logistics.
Steel mill smelting profits narrowed significantly, with 304 cold-rolled profit margins at only 0.24% to 0.68%. The CIF China price for Indonesian high-grade NPI fell to 1,136 yuan per nickel unit. Monetary policy support emerged as the People's Bank of China announced plans to conduct 1,000 billion RMB in outright reverse repo operations via fixed-quantity, rate-tender, multiple-price allotment method, with a six-month tenor and maturity date of February 15, 2027.
Source: Shanghai Metals Market (SMM) morning meeting minutes, August 17, 2026.
Source: news.metal.com