Group 1: Report Industry Investment Rating - Not provided in the content Group 2: Core Viewpoints of the Report - The nickel price is currently in a consolidation phase. Last week, Indonesia's review of the compliance of port logistics in the nickel industrial park increased the risk of supply disruptions, and the rainy season in the main production areas poses a challenge to the stability of raw material supply. In December, the net import volume of nickel products increased significantly, while weak downstream demand led to a further accumulation of inventory contradictions. However, as nickel ore supply tightens and the supply - demand pattern is expected to improve, the nickel price still has upward momentum [3][4] Group 3: Summary by Relevant Catalogs Nickel Market - **Nickel Price and Market Sentiment**: The nickel price is in a volatile state. The Shanghai Nickel 2602 contract opened at 141,500 yuan/ton and closed at 148,010 yuan/ton last week, with a weekly increase of 4.71%. The overall market sentiment shows that although there are short - term supply disruptions, the long - term supply - demand situation may drive the price up [3][4][9] - **Nickel Ore**: As of January 26, the CIF prices of Philippine laterite nickel ore with grades of 0.9%, 1.5%, and 1.8% were 30, 59, and 78.5 dollars/wet ton respectively, with week - on - week increases of 1, 4, and 0 dollars/wet ton. The domestic trade prices of Indonesian Ni1.2% and Ni1.6% nickel ore also increased. The supply is affected by the rainy season, with mining and shipping in the main production areas severely disrupted. The port inventory of nickel ore decreased to 7.36 million wet tons as of January 23, a week - on - week decrease of 5.03% [33][36] - **Refined Nickel**: In December 2025, China's electrolytic nickel monthly output was 31,400 tons, a month - on - month increase of 21.7%. The inventory continued to accumulate, with the pure nickel social inventory (including the SHFE) increasing to 66,300 tons last week, a week - on - week increase of 4.38%. The cost of electrolytic nickel production also increased slightly [45][49][56] - **Nickel Intermediate Products**: As of January 26, the FOB prices of MHP and high - grade nickel matte increased. In December 2025, Indonesia's MHP and high - grade nickel matte production increased, while the MHP import volume decreased and the high - grade nickel matte import volume increased [41] - **Nickel Sulfate**: In December 2025, China's nickel sulfate monthly output decreased to 35,000 nickel tons, a month - on - month decrease of 4.47%. The market is in a state of supply - demand game, with some downstream manufacturers adopting a wait - and - see attitude. The cost of nickel salt production provides strong support, and the price is in a volatile and consolidating state [59][65] - **Ferronickel**: In December 2025, the national ferronickel production (metal content) decreased to 21,200 tons, a month - on - month decrease of 22.07%. The supply side remains at a high level, and the price is approaching the upper limit that steel mills can bear, with a key contradiction between cost and profit [70][72] Stainless Steel Market - **Stainless Steel Price and Market Performance**: The stainless steel futures market was strong last week. The main contract opened at 14,290 yuan/ton and closed at 14,725 yuan/ton, with a weekly increase of 3.15%. The spot price of the 304 variety also increased [76] - **Stainless Steel Production**: In December 2025, China's stainless steel crude steel production decreased to 3.2605 million tons, a month - on - month decrease of 6.66%. It is expected that the production in January 2026 will increase to 3.4065 million tons, a month - on - month increase of 4.48% [78] - **Stainless Steel Inventory**: As of January 23, the stainless steel social inventory decreased to 921,600 tons, a week - on - week decrease of 0.61%. The inventory is still on a downward trend, but the speed has slowed down [81] - **Stainless Steel Cost**: The cost of 304 cold - rolled stainless steel increased to 14,009 yuan/ton as of January 27, a week - on - week increase of 1.53%, mainly due to the increase in raw material prices [85] Industry News - PT Gag Nikel in Indonesia was fined for environmental audit defects, and the regulatory mechanism is becoming stricter [7] - The Indonesian Commercial Competition Supervisory Commission pointed out monopoly behavior in the port storage and logistics of the Morowali Industrial Park in Central Sulawesi and required the opening of port services and management [7] - Jilin Jien Nickel Industry Co., Ltd.'s 60,000 - ton nickel sulfate project was officially put into operation on December 31, 2025 [7] - The nickel mine of Vale Indonesia suspended mining activities due to the unapproved RKAB quota in 2026, but the smelting project is still in production [7] - Shengtun Mining Group Co., Ltd. terminated the investment in the 40,000 - nickel - metal - ton high - grade nickel matte project in Indonesia [7]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Nickel - **Key Trends**: Strong gains in nickel intermediary prices observed in September, with LME nickel averaging USD 15,310/ton (+1% month-over-month) supported by increased nickel sulfate prices and tighter MHP feedstock [1][3] Core Insights - **Nickel Prices**: Nickel sulfate prices rose approximately 5% due to tighter feedstock and increased demand for precursors, leading to a premium over LME prices of about 2%, the highest since October 2022 [1] - **Nickel Pig Iron (NPI)**: Average price for NPI was USD 11,940/ton, up 4% month-over-month, attributed to Indonesia's crackdown on illegal mining [1] - **Market Dynamics**: Anticipation of pre-buying by smelters ahead of the 2026 permit approval cycles and the Philippines' monsoon season could further influence prices [1] - **Ore Premiums**: High premiums for higher-grade saprolite nickel ore, with prices reaching USD 57-60/ton, compared to a 2Q average of USD 54/ton [1] Company-Specific Insights - **Preferred Picks**: ANTM is favored despite expected soft 3Q earnings due to gold supply issues, as its nickel business is expected to offset declines in gold performance [1] - **Neutral Ratings**: INCO and MDKA are rated Neutral; INCO's stock has outperformed the JCI by 14% in September, but future earnings growth is seen as overvalued [1][3] Supply and Demand Dynamics - **Supply Constraints**: Indonesia's government has suspended 190 mining permits and imposed stricter environmental standards, which may slow refined supply growth to 5.2% year-over-year in 2026 and 3.5% in 2027 [3] - **Global Oversupply**: The Global Commodities team projects nickel to remain in oversupply by 200-300kt over the next two years due to shifts in battery chemistry and a slowdown in stainless steel demand [3] Financial Metrics - **Company Valuations**: - ANTM: Market Cap USD 5.0 billion, P/E 10.1x for FY25E, EPS growth 155.5% [4] - INCO: Market Cap USD 2.8 billion, P/E 61.6x for FY25E, EPS growth -23.1% [4] - MDKA: Market Cap USD 3.5 billion, P/E NM for FY25E, EPS growth NM [4] Additional Considerations - **Investor Sentiment**: Feedback indicates skepticism regarding INCO's future earnings, suggesting that current stock prices may reflect overly optimistic projections [3] - **Long-term Outlook**: The nickel market is expected to face challenges from evolving battery technologies and fluctuating demand from the stainless steel sector, which could impact pricing and profitability [3] Conclusion - The nickel industry is experiencing price increases driven by supply constraints and demand dynamics, with specific companies like ANTM positioned favorably. However, broader market conditions suggest potential oversupply and challenges ahead, particularly for companies like INCO and MDKA.