In the first half of October, nickel prices accelerated their decline under macro systemic pressure and an already weak supply-demand picture, nearing the cyclical low seen at the end of 2025.
A modest rebound followed, with some Indonesian industrial parks forced to cut operating rates due to drought, and reports suggesting Indonesian smelters planned coordinated output cuts.
Cost support for ore prices shifts lower
Recently, nickel ore prices have broadly weakened, with the CIF price of Philippine laterite nickel ore at 1.4% grade falling to $51 per wet tonne last week.
Freight rates edged up slightly, with the rate from Surigao to Lianyungang rising to $15.5 per wet tonne, while geopolitical tensions in the Middle East remain difficult to ease and global energy prices stay elevated.
According to customs data, China imported 6.5155 million tonnes of nickel ore in September, up 9.4% month-on-month and 6.8% year-on-year, with cumulative imports of 38.077 million tonnes in the first nine months, up 18.6% year-on-year, of which about 91% came from the Philippines.
In the near term, the rainy season in the main Philippine producing region of Surigao has been delayed, prompting mines to accelerate shipments amid favorable weather, keeping domestic arrivals high.
On port inventories, as of October 23, Mysteel statistics showed nickel ore inventories at 14 Chinese ports reached 15.2745 million wet tonnes, already at a high level for the same period in previous years, of which Philippine-origin nickel ore inventories stood at 14.2745 million wet tonnes.
In Indonesia, newly added quotas from mid-year have continued to be released, and combined with higher imports, the overall market remains in a relatively loose state.
The energy and mineral resources ministry announced that the HMA nickel price for the second half of October fell 2.9% from the first half, marking a third consecutive period of decline, dragging HPM prices across all grades lower in tandem; actual transaction premiums for domestic-trade ore have weakened notably, and cost support from ore prices continues to shift downward.
The ministry said next year's RKAB assessment will be faster than this year's and promised to set nickel ore production quotas fairly. Applications for 2027 nickel ore quotas began on October 1 and run through November 15, with subsequent application and approval progress worth watching.
Output-cut rumors for intermediate products
On October 21, market rumors suggested Indonesian smelters might jointly cut production of MHP, high-grade nickel matte and ferronickel, with sizable reductions. Later verification by related media found no formal agreement among the companies, though some did intend voluntary cuts, with the extent of load reductions smaller than market talk suggested, concentrated more in loss-making hydrometallurgical lines, while pressure on the NPI smelting segment was not as great and the incentive for large-scale cuts was insufficient.
According to Mysteel, one Indonesian MHP project has already cut output by 50%, and another project plans a further 50% reduction in November; on the NPI side, apart from an individual project on Obi island expected to cut output as agreed, some projects in the IMIP and IWIP parks may reduce production due to year-end maintenance or annual losses.
In addition, due to water shortages, some RKEF lines in Morowali, Indonesia, have already been operating at reduced loads.
According to Mysteel, China and Indonesia nickel pig iron output in September, measured in metal content, was 171,300 tonnes, down 1.8% month-on-month, with cumulative output of 1.4662 million tonnes in the first nine months, down 6.9% year-on-year; China's nickel pig iron output in September fell about 3% month-on-month to 26,700 tonnes, and after mid-September, production profits for RKEF-process nickel pig iron in major domestic regions kept narrowing, with some regions entering losses in October; Indonesia's nickel pig iron output in September was 144,600 tonnes, down 1.57% month-on-month, affected by production disruptions caused by drought, cost pressure and a sluggish market.
Indonesia's nickel matte output has trended lower since April, falling to 24,700 tonnes in September, while MHP output also slipped slightly in August and September due to still-high sulfur costs and maintenance and output cuts at some hydrometallurgical projects.
An Indonesian official said the country plans to suspend approvals for new smelting and processing facilities used to produce nickel semi-finished products while supporting the end-product manufacturing industry. In the long run, this is conducive to easing the surplus in intermediate products.
China imported 1.085 million tonnes of ferronickel in September, up 12.9% month-on-month and roughly flat year-on-year, with cumulative imports of 7.679 million tonnes in the first nine months, down about 7% year-on-year, of which about 96% came from Indonesia.
September imports of nickel hydrometallurgical intermediates were 135,600 tonnes, up 18.1% month-on-month but down about 29% year-on-year, also mainly from Indonesia.
In the nickel pig iron spot market, a transaction price of 1,005 yuan per nickel unit (ex-port pickup) from a mainstream steel mill in North China early last week broke through the previous psychological floor, but spurred by rumors of Indonesian intermediate product output cuts, quotes quickly rebounded to 1,030-1,050 yuan per nickel unit, with steel mills becoming more cautious.
High inventory pressure persists
In September this year, Mysteel reported China's refined nickel output at 28,651 tonnes, extending the decline since April with a slightly narrower drop, as both purchased raw materials and integrated production processes were in a loss-making state, small and medium-sized enterprises scaled back capacity, and weak demand and high visible inventories also restrained production, with the national average capacity utilization rate falling to around 54%.
Indonesia's refined nickel output in September was 7,500 tonnes, up slightly month-on-month but still below the highs of the first half.
Domestic pure nickel inventories have continued to decline after hitting a record high in August; as of last week, total nickel inventories at the Shanghai Futures Exchange fell to 105,500 tonnes, with warrant volumes at 90,700 tonnes, though still at an absolutely high level, with marginal improvement.
Because nickel prices fell rapidly earlier, Jinchuan Nickel's willingness to hold prices firm strengthened, with spot premiums once raised above 4,800 yuan per tonne, and although they have edged back recently, they remain at elevated levels.
LME nickel inventories have shown little change at high levels, with total inventories still around 280,000 tonnes and registered warrants at 259,000 tonnes, while the 0-3 cash spread narrowed slightly to around a $185 per tonne discount.
Demand side remains weak
On the stainless steel side, Mysteel statistics show China's 300-series stainless steel crude steel output in September was 1.9224 million tonnes, down 3.1% month-on-month but up 9.1% year-on-year, as weak demand and persistently falling prices prompted steel mills to cut output voluntarily, with October schedules down about 6.2% to 1.803 million tonnes.
300-series stainless steel social inventories, after a small build-up to above 680,000 tonnes during the National Day holiday, fell to 647,000 tonnes in the past two weeks, roughly a normal level compared with the same period in previous years.
In downstream performance, as futures and spot prices rose, market trading sentiment warmed, purchasing enthusiasm increased, and transactions improved month-on-month.
On the new energy side, battery-grade nickel sulfate prices continued to weaken, with both supply and demand soft, downstream companies mainly relying on long-term contracts and showing weak interest in building inventory through spot purchases.
At the end-user level, China's ternary battery installations in September were 12,300 megawatt-hours, up slightly month-on-month but down about 11% year-on-year, with their share of power battery installations falling to around 14%, as the ternary technology route's share keeps shrinking.
Leading ternary cell makers revised down September and fourth-quarter orders, and October ternary precursor schedules fell about 5%.
Summary
Overall, on the macro front, geopolitical tensions are unlikely to ease in the near term, energy prices are spiking and inflation pressure is strengthening; the Federal Reserve's policy meeting at month-end is unlikely to bring a rate hike, but another hike remains possible in December; gold and silver are under pressure and weak, which may drag on base metals.
On the supply-demand front, nickel prices suppressed to low levels already had room for an oversold sentiment recovery, cost support from losses in pure nickel and hydrometallurgical processes, marginal improvement from a turn in domestic inventories, and a boost from firm pricing sentiment in the spot market, and they rebounded on market rumors that Indonesian intermediate products may cut output; however, it should also be noted that ore prices are continuing to slide, global pure nickel inventories remain high, and demand lacks clear incremental growth, so the loose supply-demand picture will persist. If the output cuts are disproven, nickel prices may weaken again, while if cuts gradually materialize, support below nickel prices will become more solid.
In the near term, there are many factors to watch, not only the Fed's policy meeting, the U.S. midterm elections and geopolitical changes, but also the fermentation and subsequent implementation of output-cut news and Indonesia's 2027 RKAB quota applications.
For reference only. Author: Qu Yajuan, license: F03113549, non-ferrous metals analyst at Chang'an Futures.
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