[SMM Analysis] Nickel prices jumped initially and then pulled back, with sluggish spot transactions and continuous inventory buildup

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At the beginning of this week, nickel prices continued the trend of rebounding slightly. The most-traded SHFE nickel contract (NI2509) reached a high of 123,000 yuan/mt, before prices pulled back significantly, closing at 120,600 yuan/mt on Friday, with a weekly decline of 1.2%. The latest LME nickel quote was $15,060/mt, with a weekly decline of 0.26%, and nickel prices were mainly in the doldrums this week. In the spot market, the average price of SMM #1 refined nickel this week was 123,000 yuan/mt, with a weekly decline of 450 yuan/mt. The premium of Jinchuan nickel fluctuated between 2,000-2,300 yuan/mt this week, while the premium range of domestic mainstream electrodeposited nickel remained at -100-300 yuan/mt this week. Spot transactions were sluggish, with fewer downstream orders for alloy electroplating, lower purchase willingness, and a significant accumulation of refined nickel inventory among traders.

Macro perspective, after the release of the US July CPI data this week, the market's expectation for the probability of an interest rate cut in September rose to over 94%. The US dollar index pulled back to around 98, and Trump publicly pressured Fed Chairman Powell to "cut interest rates immediately," further strengthening easing expectations. However, at the same time, European leaders urged Trump to pressure Putin to agree to a ceasefire and meet with Zelenskyy. Trump claimed that if Russia did not stop the conflict, it would face consequences. Geopolitical and policy uncertainties still brought uncertainties to the market. In the short term, nickel prices are still oscillating amid the tug-of-war between macro sentiment support and weak fundamentals and high inventory pressure, with a price range of 119,000-123,000 yuan/mt.

In terms of inventory, the inventory in the Shanghai Bonded Zone was approximately 4,700 mt this week, unchanged WoW.

Domestic social inventory was approximately 41,900 mt, with an inventory buildup of 1,320 mt WoW.