Discontinuation of MHP Outright Price Assessments: Market Impact Analysis

Understanding the Impact of Discontinuing MHP Outright Price Assessments

The battery materials industry is experiencing a significant shift in pricing methodology with Fastmarkets' recent announcement to discontinue outright price assessments for Mixed Hydroxide Precipitate (MHP). This decision, effective July 23, 2025, marks a pivotal change in how this critical battery material is valued in global markets. The move follows an extensive market consultation that confirmed the industry's transition toward payables-based pricing mechanisms.

For industry stakeholders—from miners and processors to battery manufacturers and traders—this change necessitates immediate adjustments to contract structures, pricing references, and risk management strategies. While the shift aligns with broader market evolution, it requires careful navigation during the transition period.

"This change reflects the natural evolution of the battery materials market toward more sophisticated and responsive pricing mechanisms that better handle volatility in underlying metal prices," notes industry analysts familiar with the decision to discontinue MHP outright price assessments.

Historical data for discontinued assessments will remain accessible, providing crucial reference points for existing contracts while the market fully adopts the payables methodology. The discontinuation impacts not only direct price references but also associated short-term forecasts, requiring comprehensive adaptation across market intelligence systems.

What Are Mixed Hydroxide Precipitate (MHP) Price Assessments?

Definition and Market Significance

Mixed Hydroxide Precipitate represents a critical intermediate product in the battery material supply chain, containing both nickel and cobalt hydroxides. This material serves as a key feedstock for high-nickel cathode active materials essential to electric vehicle battery production. The strategic importance of MHP has grown significantly with the expansion of the global EV market and the push for batteries with higher energy density.

Price assessments for MHP have historically followed two distinct methodologies:

1. Outright pricing: Direct dollar-per-tonne valuation independent of underlying metal prices
2. Payables pricing: Percentage-based valuation directly linked to LME nickel and cobalt benchmark prices

These assessments have provided crucial market transparency, enabling contract negotiations and supporting investment opportunities insights throughout the battery supply chain. They have been particularly important as new production capacity, especially from Indonesia, has entered the market in recent years.

Types of Price Assessment Methodologies

Outright pricing, now discontinued, provided a fixed dollar-per-tonne valuation that offered simplicity but limited flexibility during periods of metal price volatility. This approach was initially favored when MHP first emerged as a traded commodity, providing straightforward valuation during the market's development phase.

In contrast, payables pricing—which remains in place—expresses MHP value as a percentage of underlying LME metal prices, typically:

• Percentage of LME nickel price for the nickel content
• Percentage of MB cobalt price for the cobalt content

This methodology provides several advantages:

• Automatic adjustment to base metal price movements
• Better alignment with downstream pricing mechanisms
• Enhanced risk management capabilities for both buyers and sellers
• Greater transparency in value calculation

The regional variations in assessments reflect the geographic reality of the MHP market, with Indonesia emerging as the dominant production hub and China, Japan, and South Korea serving as the primary processing destinations.

Why Has Fastmarkets Discontinued MHP Outright Pricing?

Market Evolution Toward Payables

The decision to discontinue outright pricing represents the culmination of a multi-year shift in market preferences. According to Fastmarkets' formal announcement, "the outright prices no longer reflect market conditions, with the market shifting toward payables as the dominant pricing method." This evolution mirrors similar transitions seen in other intermediate battery material markets.

Several factors have driven this shift:

• Increased metal price volatility: The nickel market in particular has experienced unprecedented price swings in recent years, making fixed-price mechanisms increasingly problematic for long-term contracts.

• Risk management optimization: Payables-based pricing allows both buyers and sellers to manage exposure to underlying metal price fluctuations more effectively.

• Market maturation: As the MHP market has developed, pricing mechanisms have naturally evolved toward greater sophistication and alignment with established commodity market practices.

• Supply chain integration: Greater vertical integration in the battery supply chain has created preference for pricing mechanisms that correlate across multiple production stages.

Consultation Process Details

Fastmarkets conducted a comprehensive market consultation from June 20 to July 18, 2025, seeking feedback from producers, consumers, traders, and other market participants. This process revealed strong consensus that outright pricing had become increasingly less relevant to actual market transactions.

The consultation highlighted several key points:

• Market participants confirmed that contract negotiations now predominantly reference payables percentages rather than fixed dollar values
• Stakeholders indicated that outright pricing had become a secondary reference at best, with payables driving actual transaction terms
• Industry feedback suggested that the continued publication of both methodologies was creating unnecessary market confusion

Following this feedback, Fastmarkets announced the discontinuation on July 23, 2025, providing immediate implementation to align with market expectations. This decision exemplifies the price reporting agency's commitment to ensuring its assessments accurately reflect evolving market dynamics.

Which Specific Price Assessments Were Discontinued?

Affected Nickel MHP Assessments

Two specific nickel MHP price assessments have been discontinued:

1. MB-NIO-0003: Nickel mixed hydroxide precipitate outright price, cif China, Japan and South Korea, $ per tonne

   • This assessment covered imported material reaching major Asian battery manufacturing hubs
   • Provided visibility into pricing for material delivered to key consumption centers
   • Represented a critical reference for material shipped from various global production regions

2. MB-NIO-0005: Nickel mixed hydroxide precipitate outright price, fob Indonesia, $ per tonne

   • Focused specifically on material exported from Indonesia
   • Reflected the growing importance of Indonesian production in global supply
   • Provided visibility into pricing at the point of origin for a significant portion of global supply

These assessments had served as important benchmarks since the emergence of MHP as a significant traded intermediate product. Their discontinuation marks the completion of the market's transition to payables-based pricing mechanisms.

Affected Cobalt MHP Assessment

One cobalt-focused assessment has also been discontinued:

MB-CO-0025: Cobalt mixed hydroxide precipitate outright price, cif China, Japan and South Korea, $ per tonne

• Provided specific valuation for the cobalt component in MHP
• Supported pricing decisions for battery manufacturers focused on cobalt content
• Complemented the nickel assessments to provide comprehensive MHP valuation

The discontinuation of this assessment will particularly impact stakeholders focused on cobalt supply analysis and those using MHP as an alternative to traditional cobalt hydroxide supply chains.

Related Research Products

Fastmarkets has also discontinued short-term forecasts associated with these outright price assessments. This affects various analytical products including:

• Forward price curves for MHP
• Short-term supply-demand balance projections
• Price forecast models that incorporated the outright assessments

Market analysts and research teams are adjusting their methodologies to focus exclusively on payables-based assessments and forecasts. This transition ensures alignment with actual market transaction mechanisms while maintaining analytical rigor and market transparency.

How Does This Change Impact Market Participants?

Implications for Traders and Producers

The discontinuation of outright price assessments creates both challenges and opportunities for market participants. Traders and producers must now:

1. Review existing contracts: Identify agreements that reference the discontinued assessments and develop transition strategies
2. Adapt pricing models: Update internal valuation tools to focus exclusively on payables-based calculations
3. Realign risk management: Adjust hedging strategies to account for the closer link to LME metals
4. Update market intelligence systems: Reconfigure price reporting dashboards and analysis tools

For producers, particularly those in Indonesia where significant MHP capacity has been developed, the transition emphasizes the importance of understanding LME nickel price dynamics and their impact on realized revenue. Traders must similarly adjust their market volatility hedging approaches to account for the more direct correlation with base metal price movements.

"This transition period requires careful attention to contract details, but ultimately creates a more transparent and efficient pricing mechanism," according to market participants consulted during the assessment review.

Effects on Battery Supply Chain Transparency

The shift toward payables-exclusive pricing creates a more integrated approach to battery material valuation throughout the supply chain. Key impacts include:

• Enhanced correlation: Stronger direct relationship between raw material costs and refined product pricing
• Streamlined analysis: Simplified comparison across different stages of the battery material value chain
• Improved forecasting: More accurate modeling of cost impacts from base metal price changes
• Reduced information asymmetry: More standardized pricing approach across market participants

While some market participants may experience short-term challenges adapting to the new methodology, the long-term effect should be greater price transparency and more efficient market functioning. The change also brings MHP pricing in line with other intermediate battery materials, creating greater consistency across the industry.

Contract Adjustment Requirements

Organizations with contracts referencing the discontinued assessments face immediate adjustment requirements:

• Identify affected agreements: Conduct comprehensive contract review to locate references to discontinued codes
• Develop amendment protocols: Establish standardized approaches to contract modifications
• Negotiate replacement references: Engage counterparties to agree on appropriate payables-based alternatives
• Implement fallback provisions: Include contingency measures for future pricing methodology changes

Legal teams should prioritize the review of long-term supply agreements, particularly those with delivery terms extending beyond 2025. The absence of a transition period means immediate action is required to ensure pricing continuity in existing contractual relationships.

What Alternative Price References Are Available?

Current MHP Payables Assessments

Fastmarkets continues to publish payables-based assessments for MHP, which now serve as the primary price references for the market. These assessments express MHP value as a percentage of the underlying metal prices, typically:

• Nickel content: Percentage of LME nickel cash settlement price
• Cobalt content: Percentage of standard-grade cobalt price

These payables assessments maintain the same regional coverage as the discontinued outright prices, ensuring continued visibility into key trading routes and delivery locations. The methodology provides a direct link to the underlying metal markets while accounting for processing costs, impurities, and other factors specific to MHP.

Methodology and Specifications

The continuing payables assessments follow standardized procedures that ensure market representativeness and reliability:

• Data collection: Gathering of information from a diverse range of market participants
• Validation process: Multi-step verification to ensure data quality and representativeness
• Publication schedule: Regular assessment publication on clearly defined schedules
• Specification parameters: Defined quality requirements including moisture, impurity limits, and metal content

The specifications match those previously used for outright assessments, maintaining consistency in the material being assessed while changing only the valuation mechanism. This approach minimizes disruption while addressing the core market evolution toward percentage-based pricing.

Data Contribution Opportunities

Market participants can actively contribute to the continued quality of MHP payables assessments by becoming data submitters. Fastmarkets has established a structured process for market participation:

1. Contact Dylan Duan and Sybil Pan via pricing@fastmarkets.com to express interest
2. Complete the onboarding process to become an approved data contributor
3. Submit regular price information according to established protocols
4. Receive confirmation of data receipt and processing

Contributors benefit from the opportunity to ensure their market perspective is reflected in the assessment process while maintaining strict confidentiality protections. Broad market participation strengthens the representativeness of the published assessments and enhances overall market transparency.

How to Navigate the Transition Period?

Best Practices for Market Participants

Organizations can implement several best practices to ensure a smooth transition following the discontinuation of outright price assessments:

1. Conduct comprehensive contract review:

   • Identify all agreements referencing discontinued assessments
   • Prioritize review based on contract value and duration
   • Document findings in a centralized tracking system

2. Develop standardized amendment language:

   • Create template clauses for contract modifications
   • Ensure legal review of proposed changes
   • Prepare fallback provisions for future methodology changes

3. Implement communication protocols:

   • Notify counterparties of necessary contract adjustments
   • Explain the market evolution toward payables pricing
   • Establish timelines for amendment completion

4. Update internal systems:

   • Revise pricing models and calculators
   • Adjust risk management tools and hedging strategies
   • Retrain personnel on payables-based valuation approaches

These practices can minimize disruption while ensuring continued operational effectiveness throughout the transition period.

Industry Communication Channels

Fastmarkets has established multiple communication channels to support market participants during this transition:

• Formal feedback mechanism: Direct email to pricing@fastmarkets.com
• Methodology documentation: Comprehensive information at fastmarkets.com/methodology
• Consultation process: Ongoing engagement with market participants
• Confidentiality options: Protected feedback channels for market-sensitive information

Maintaining open communication with both the price reporting agency and counterparties can facilitate smoother adjustment to the new pricing landscape. Regular monitoring of industry publications and participation in relevant forums can also provide valuable insights during the transition.

Timeline for Implementation

The discontinuation timeline includes several key elements:

• Immediate discontinuation: Effective July 23, 2025
• No parallel publication period: No grace period or transitional dual publishing
• Historical data access: Continued availability of discontinued assessment history
• Forward curve adjustments: Immediate recalibration of associated analytics

This immediate implementation approach reflects the market's already advanced transition toward payables-based pricing mechanisms. Organizations should complete their internal adjustments as quickly as possible to align with this industry-wide change.

What Does This Reveal About Battery Material Market Trends?

Evolution of Battery Supply Chain Pricing

The discontinuation of MHP outright pricing reflects broader evolutionary trends in battery material markets:

1. Increasing sophistication: Movement toward more complex, responsive pricing mechanisms
2. Greater integration: Closer alignment between intermediate and refined product pricing
3. Enhanced transparency: More direct relationship between input costs and final material pricing
4. Standardization: Convergence around common pricing methodologies across different materials

These trends signify the market's maturation as battery metals investment shifts from niche commodities to mainstream industrial inputs. The evolution parallels earlier developments in more established commodity markets, where pricing mechanisms typically progress from simple fixed-price approaches to more dynamic, integrated systems.

Regional Market Dynamics

The discontinued assessments reflect the geographic reality of the current MHP market:

• Indonesia's dominance: The specific fob Indonesia assessment highlights the country's central role in global MHP production
• Asia's processing hub status: China, Japan, and South Korea remain the primary MHP consumers
• Integrated supply chains: Producer-processor relationships increasingly structured around long-term arrangements
• Emerging production regions: Potential new production areas monitoring existing pricing mechanisms

These regional dynamics continue to evolve as the battery industry expands and new production capacity comes online. The payables-based pricing approach provides flexibility to accommodate these changes while maintaining pricing consistency across different production regions.

Future Price Assessment Developments

The shift to exclusive payables-based pricing may foreshadow additional developments in battery material price assessments:

• ESG premium mechanisms: Potential development of sustainability-linked pricing adjustments
• Quality-specific assessments: More granular pricing based on precise material specifications
• Chemistry-specific benchmarks: Specialized assessments for evolving battery chemistries
• Digital integration: Enhanced data submission and assessment technologies

These potential developments would build upon the foundation established by the current payables methodology, providing even greater market transparency while accommodating the battery industry's continuing evolution and technical advancement as part of the broader critical minerals transition.

FAQ: MHP Price Assessment Changes

What exactly is Mixed Hydroxide Precipitate (MHP)?

Mixed Hydroxide Precipitate is an intermediate product in the battery material supply chain, produced primarily from lateritic nickel ore through high-pressure acid leaching (HPAL) or similar processes. Key characteristics include:

• Composition: Typically contains 35-40% nickel and 2-3% cobalt in hydroxide form
• Physical properties: Fine powder with high moisture content (approximately 50-60%)
• Production process: Precipitation from leach solution using magnesia or lime
• Value chain position: Bridge between raw ore and battery precursor materials

MHP has gained significant importance as a feedstock for battery cathode materials, particularly as the industry shifts toward high-nickel formulations for greater energy density. Its dual nickel-cobalt content makes it particularly valuable for NMC (nickel-manganese-cobalt) and NCA (nickel-cobalt-aluminum) battery chemistries.

Why are payables preferred over outright pricing?

The industry preference for payables over outright pricing stems from several fundamental advantages:

1. Automatic adjustment to metal price volatility: Payables pricing automatically reflects changes in underlying metal values
2. Simplified risk management: Clearer correlation with hedgeable LME and MB metal prices
3. Contractual flexibility: Easier to maintain stable long-term relationships while accommodating market changes
4. Market alignment: Consistency with pricing approaches for other intermediate products

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