[SMM Analysis] Nickel Prices Broke Through the 150,000 Mark This Week, Supply Crisis Continued to Escalate

Nickel prices continued to rise sharply this week, with the market narrative shifting from last week's "fluctuating at highs after policy materialization" to "full fermentation of substantive supply-side shocks." Indonesia's Weda Bay nickel mine announced a May production halt for maintenance due to exhausted RKAB quotas, Huayou Cobalt's subsidiary Huafei Nickel & Cobalt announced partial production line shutdowns from May 1 due to sulfur shortages, and the continued blockade of the Strait of Hormuz in the Middle East deepened the sulfur supply crisis. The three supply-side shocks combined to push nickel price centers sharply higher. The most-traded SHFE nickel contract broke through the 150,000 yuan/mt mark this week, while LME nickel briefly surpassed $19,500/mt intraday. Spot market, SMM #1 refined nickel averaged 150,000 yuan/mt this week, up 5,000 yuan/mt WoW. Spot premiums remained low as futures surged rapidly, with Jinchuan nickel premiums declining to 1,300 yuan/mt. Domestic mainstream electrodeposited nickel maintained significant discounts, further highlighting the structural feature of "strong futures, weak spot" in supply-demand fundamentals.

On the macro front, US-Iran negotiations reached a complete impasse this week, with expectations of prolonged geopolitical risks rising. The two sides diverged sharply on the Strait of Hormuz issue: Trump claimed Iran was "on the verge of collapse and requesting the strait be opened," demanding Iran hand over all enriched uranium; Iran emphasized its "absolute control" over the strait and demanded transit fees from passing vessels. Fed Chairman nominee Warsh explicitly refused to commit to interest rate cuts at last week's hearing, and the market continued to digest this stance this week — CME Fed Watch showed a 99% probability of rates remaining unchanged in April and only about 3% probability of a cumulative 25bp cut by June, with monetary easing expectations virtually disappearing.

Inventory, Shanghai Bonded Zone inventory was approximately 1,700 mt this week, flat WoW. China's social inventory was approximately 101,000 mt, with an inventory buildup of approximately 3,200 mt WoW.

Looking ahead, although persistently high domestic inventory continued to pressure prices, Indonesia's Q2 triple shock of "ore tightening + sulfur supply disruption + MHP production cuts" is accelerating from expectations toward reality. After the Labour Day holiday, the most-traded SHFE nickel contract is expected to trade in the range of 145,000-155,000 yuan/mt.