China's nickel sulfate prices rose strongly in August. As of August 28, the market price for battery-grade crystalline nickel sulfate reached Yuan 27,300-27,600/tonne, an increase of Yuan 600/tonne compared to the end of July. This rally was primarily driven by growing demand from the downstream ternary sector, a periodic tightening in industry supply, and persistently rising raw material costs.
On the demand side, nickel sulfate consumption showed significant growth in the third quarter. The launch of models from Chinese automakers like Xiaomi and AITO generated substantial new demand for 6-series ternary precursor in Q3, prompting companies to build inventories early for the traditional September-October sales peak. Entering August, downstream demand for ternary precursor further rose. Some precursor manufacturers increased production schedules, leading to a notable rise in procurement demand for nickel sulfate from related enterprises. Mysteel survey indicates an expected additional nickel demand of approximately 1,000 tonnes (in Ni. content) from ternary precursor in September.
Source: Mysteel
Furthermore, overseas demand continued to recover, particularly with order growth from countries like South Korea and Belgium. China's exports of ternary materials to South Korea doubled year-on-year in June-July, while exports to Belgium increased by about 1,000 tonnes month-on-month. International companies also saw rising orders for high-nickel products. However, uncertainties in the international trade environment in Q4, including potential obstacles from tariff barriers in some countries, may directly impact export demand.
On the supply side, the supply of nickel sulfate is currently tight. The estimated total supply (including imports) for August was 48,300 tonnes in Ni. content, with a September forecast of 49,800 tonnes in Ni. content. The primary reason for August's tightness was scheduled maintenance shutdowns at individual nickel salt plants, which limited overall production capacity utilization.
In September, it is expected that stocks of previously procured low-cost raw materials were depleted in August at some operations. With rising costs for new raw material purchases, these companies may shift towards tolling business. While the spot market remained tight, a slight increase in total nickel sulfate production is anticipated for August, as some plants from August resume operations and additional supply comes online from increased tolling processing and integrated line production. Looking ahead to the fourth quarter, new Chinese projects are scheduled to commence operation. However, as demand is widely expected to soften, nickel sulfate supply is forecast to become more ample.
On the cost front, the discount coefficient of MHP rose by 2% to 87%, driving costs up by Yuan 3,600/tonne. China's nickel sulfate production stood at 194,700 tonnes in July, or 42,800 tonnes in Ni. content, up 6.9% month on month (MoM) according to Mysteel survey. The production comprised 0% nickel briquette/powder, 52.9% MHP, 38.54% high-grade nickel matte, 6.69% secondary nickel by raw material, and 0.42% NPI. This indicates that MHP still constitutes a significant portion.
Source: Mysteel
Although the LME nickel benchmark price remained stable in August, tight MHP supply and a significantly higher coefficient noticeably increased cost pressures for nickel sulfate. Most Q4 MHP contract signing has been completed, with the nickel coefficient offered at a discount of 87% and the cobalt coefficient at 70%. Downstream companies currently indicate that a transaction coefficient relative to the LME nickel price of at least 90% is required for deals to materialize. Consequently, the production cost for nickel sulfate from MHP and high-nickel matte is approximately Yuan 27,300/tonne. With strong bargaining power residing upstream in the industry chain, downstream enterprises generally expect the nickel intermediate product coefficient for September to remain flat or increase slightly.
Furthermore, the market widely believes there is a possibility of nickel prices falling in the fourth quarter. The main factors expected to lower the price center include anticipated inventory builds from new pure nickel production capacity coming online, seasonal demand weakness in the traditional low season, and the potential for price softening as Indonesian nickel ore production increases.
Looking ahead to September, nickel sulfate prices are expected to trade firmly within a range of Yuan 27,300-28,000/tonne. This outlook is supported by improved sentiment in the nickel market, driven by a recovery in demand from both the stainless steel and ternary battery end-use sectors. Low inventory levels within the nickel sulfate industry and the prevailing high-cost environment will provide strong underlying support for prices. Further into the fourth quarter, the traditional peak season in October is anticipated to sustain prices within an expected range of Yuan 27,000-28,000/tonne.
However, for November-December, the potential release of new nickel ore quotas in Indonesia, coupled with the onset of the seasonal demand low, is likely to exert downward pressure on nickel prices. Nickel sulfate production costs are also projected to decrease to around Yuan 26,500/tonne. Consequently, the price center for nickel sulfate is forecast to experience a slight decline, moving to a range of Yuan 26,300-26,700/tonne.
Market participants are advised to closely monitor key developments, including the nickel surplus, and the re-approval process for Indonesia's 2026 nickel ore quotas expected in October.