Market Update - Nickel Dynamics Turning Structural

Overnight, LME base metals closed broadly higher, reflecting improved macro sentiment.

Nickel ore prices remain stable, while NPI (nickel pig iron) prices have edged up by RMB 5/mt. However, the real shift lies in Indonesia’s revision of the HPM pricing formula, a move with deeper structural implications.

The updated mechanism significantly raises the correction factor for 1.6% grade nickel ore from 17% to 30%, while introducing additional elements such as cobalt, iron, and chromium into the pricing model. This adjustment has materially lifted the benchmark price, with policy strength exceeding market expectations.

From a fundamental perspective, the dry season has commenced, supporting increased mining output and shipments. Yet, with benchmark prices elevated, downstream acceptance, particularly for ore and intermediate products, remains uncertain and warrants close observation.

On the NPI side, prices are stabilizing, but cost pressures are building. The revised benchmark directly impacts production economics, intensifying market negotiations across the value chain.

Meanwhile, improving expectations around US–Iran negotiations have lifted overall market sentiment, providing additional support to base metals.

Outlook: Nickel prices are likely to remain firm in the short term, with volatility driven by policy shifts, cost revaluation, and downstream demand response.