On April 7, 2025, the SHFE most-traded nickel contract 2505 opened in the morning at its daily limit-down, at Yuan 115,450/t. Although there was a slight recovery later in the session, the overall intraday decline still exceeded 5%. The primary cause was the U.S. imposition of so-called "reciprocal tariffs," which dampened market sentiment and led both supply and demand sides in the nickel pig iron (NPI) market to adopt a cautious wait-and-see approach.
In 2024, 60% of the U.S. nickel resources were sourced from imports, while the remaining 40% came from domestic scrap supplies. Among these, the U.S. imported 50,059 tonnes of nickel pig iron, with the materials mainly coming from Brazil (68.89%), New Caledonia (21.59%), and Colombia (9.39%). In response to the U.S. executive order on so-called "reciprocal tariffs," Brazil has expressed its opposition, and the Brazilian Senate passed a bill to authorize the government to implement reciprocal countermeasures against countries that impose trade barriers on Brazilian goods. This move could potentially impact the U.S. imports of nickel pig iron.
In response to U.S. President Trump's announcement of the so-called "reciprocal tariffs," Indonesian President Prabowo Subianto stated that Indonesia would not take retaliatory measures and is currently in negotiations with the U.S. regarding the tariff issue. According to data, the U.S. accounted for 12.3% of Indonesia's total exports in 2023, and the imposition of higher tariffs could significantly impact the Indonesian economy. Market sources indicate that, due to the pressure from the U.S. tariff policy, the release of Indonesia's revised PNBP (Non-Tax State Revenue) policy might be delayed. Relevant government departments in Indonesia are reportedly reviewing the policy again, potentially adjusting its content or implementation timeline in light of the current international trade tensions.
Due to macroeconomic sentiment, both SHFE nickel and stainless steel futures have seen sharp declines recently, accompanied by a significant drop in stainless steel spot prices, reflecting a cooling market mood. Last week, the nickel pig iron (NPI) market witnessed concentrated transactions, with mainstream deals settled at around Yuan 1,020/nickel unit (tax included, CIF ex ship's hold), temporarily halting the previous price rise and stabilizing the market. Over the past two days, the NPI market has seen no new inquiries or offers, indicating intensified bargaining between suppliers and buyers.
On the supply side, Indonesian NPI plants have largely completed their April orders. Some traders previously procured large volumes of NPI at Yuan 1,020-1,035, resulting in high holding costs, making it difficult for them to lower prices in the short term.
On the demand side, due to the weakening stainless steel market, steel mills are currently unable to accept high raw material prices. It is expected that the price of raw materials may be increased in the future.
Due to the rainy season in Indonesia's major nickel mining regions, nickel ore supply tightened, with some plants facing insufficient raw material inventory. In the first half of April, the CIF price for Ni 1.6%, MC 35% nickel ore rose by USD 5 to USD 52.51/wmt, pushing some NPI producers into negative margins.
Meanwhile, the sharp drop in LME nickel prices has added further pressure. If the weak trend continues, HPM prices for the second half of the month are expected to fall by USD 1. Currently, Indonesia's official HPM for the first pricing period of April is still set at USD 16,126.33/wmt, showing a lag in response to market conditions. Some buyers have already initiated renegotiations on the premium over the HPM benchmark.
Caught between rising upstream raw material costs and intensified downstream price suppression, NPI profit margins have been significantly squeezed. The current spot cash cost of Indonesian NPI has reached as high as Yuan 871/nickel unit.
Written by Cora Ji, jiruyan@mysteel.com
