Nickel Sulfate Market Likely to Bottom out in December as Costs Provide Floor

I. November Nickel Sulfate Market: Weak Prices and Subdued Downstream Procurement

The nickel sulfate market in November was characterized by ample spot supply and tightened downstream procurement. Prices and payable indicator exhibited a sustained downward trend with weak performance, leading to sluggish transactions. Concurrently, tightness in raw materials and policy disruptions further amplified market volatility. Key details are as follows:

Prices Experienced Volatile Declines

According to Mysteel data, the battery-grade nickel sulfate price dropped from Yuan 28,400/tonne on November 3 to Yuan 27,000/tonne on November 26, with actual transaction price hovering around Yuan 26,700/tonne. The overall weak trend in nickel sulfate prices was accompanied by declining payable indicator. With limited market transaction willingness, sellers were forced to make concessions to facilitate shipments, while buyers, making only small restocking purchases-exhibited strong price suppression intentions.

Cost Support Weakened with Narrowing Spreads

MHP transactions were priced at 90% of nickel value or $14,550–14,700/t. First-quarter transactions priced at 90% nickel and 95% cobalt were accepted by the market, indicating a gradual digestion of price divergence in the nickel sulfate market. The gap between offers and transaction prices is expected to narrow accordingly. A decline in SHFE nickel futures further dragged down nickel sulfate prices, the main SHFE nickel contract opened at Yuan 120,390/t early in the month and fell to Yuan 116,180/t at the November 25 close. This weakness directly impacted the pricing benchmark for nickel sulfate.

 Demand-Side Sluggishness Emerged as Key Pain Point

Although a demand gap for nickel sulfate from ternary precursor producers objectively existed, most manufacturers had built inventories in advance by late October, leading to only minimal restocking in November. By mid-to-late November, following the monthly procurement cycle, downstream purchasing sentiment noticeably weakened, resulting in cool market activity.

Nickel Sulfate Prices Gradually Decline with Insufficient Support for Nickel Metal Prices in Ternary Precursors

As nickel sulfate prices trended lower, support for nickel metal prices in ternary precursors remained inadequate. The offer discounts have gradually widened from 5% last month to 9%, with some producers significantly affected by downstream price pressure still transacting at 10% discounts. In contrast, cobalt metal offers had no discount, and raw material procurement remained relatively cautious. Due to the high cobalt content in 5-series precursor products, their costs continued to climb, leading to reduced cost-effectiveness. Manufacturers reported a gradual shift in November that the demand from 5-series toward medium- and high-nickel products, indicating an accelerated transition toward higher nickel content in ternary precursors.

Tight Supply Supports Price Floor

Supply-side constraints provide critical support for nickel sulfate prices, preventing a sharp decline. Persistently high prices for MHP and high-grade nickel matte, coupled with delays in commissioning new MHP projects, have limited flexibility in raw material supply for nickel sulfate production. With low inventory levels at domestic nickel salt plants and tight spot market availability, compounded by raw material cost pressures, producers demonstrated strong price support willingness. Although Indonesia's new tax and mandatory forex settlement policies will take time to fully impact the nickel sulfate market, they have already increased nickel ore export costs, further tightening supply. However, import supplements face restrictions due to hazardous chemical certifications and tariff barriers, making it difficult to quickly alleviate domestic spot circulation tightness, creating a unique pattern of "tight supply but difficult sales."

II. The Trend in December: Cost Support Expected to Push Prices Toward Bottom

The nickel sulfate market is projected to remain weak in December, with marginal changes in raw material costs and policies serving as core variables influencing price movements. A detailed analysis is provided below:

Macro Factors Shift Toward Fundamentals

Improved international relations and Indonesia's policies, which primarily affect the medium to long term, have reduced short-term macro policy disruptions. Nickel consumption from stainless steel and battery sectors has peaked, while downstream losses have widened, leading to intensified price pressure. In addition, rising domestic and international inventories of refined nickel suggest a bearish outlook for nickel prices.

MHP Pricing Strength Supports Cost Floor

Thanks to its advantage as a single raw material source, MHP maintains strong upstream pricing power. The spot payable indicator for MHP have increased slightly. With low inventory levels among leading Indonesian producers, long-term contract offers for Q1 have been raised, prompting market traders to follow suit. In December, nickel sulfate producers face limited cost pressure. Combined with weak nickel prices, transactions are likely to be settled mainly at 90% of the reference nickel price, providing some protection against a sharp decline in nickel sulfate prices.

Price Outlook: Weak but Supported

In November, nickel prices declined, while the MHP payable indicator remained stable at 90%. Nickel sulfate shipments were sluggish, with transaction prices for crystal nickel sulfate and liquid nickel sulfate stabilizing around Yuan 26,800/t and Yuan 26,700/t respectively. In December, the conversion of some refined nickel back into nickel sulfate is expected to create a slight oversupply. At the same time, costs are shifting lower with nickel prices. After a modest decline in transaction prices, cost-side support is expected to materialize, potentially leading to a short-term bottoming-out, with prices fluctuating in range of Yuan 26,500/t–26,900/t.

Edited by Cassie Li, lixiangying@mysteel.com