Nickel Prices Retreat Amid Bearish Factors: Indonesia Delays Royalty Hike, Supply Rebounds, Macro Sentiment Weakens

Nickel prices overall showed a volatile pullback pattern this week, under pressure at highs with the price center shifting downward. The main reasons were: first, Indonesia's Ministry of Mines announced a postponement of its plan to raise mineral royalties and export tariffs, partially invalidating the earlier bullish expectations on export taxes; second, the rainy season in the Philippines ended, nickel ore supply rebounded significantly, and declining ore prices undermined cost support; third, US-Iran negotiations remained in a stalemate, strong US macro data pushed the US Fed's interest rate cut path further back to 2027, and overall macro sentiment weakened. The most-traded SHFE nickel contract fell further from around 147,000 yuan/mt to around 143,000 yuan/mt this week, while LME nickel also declined in tandem, closing at around $18,650/mt, both posting notable weekly declines. Spot market side, the SMM average price of #1 refined nickel was 146,460 yuan/mt this week, down 2,750 yuan/mt WoW. Jinchuan nickel premiums stabilized and rebounded to 1,300 yuan/mt, and discounts on mainstream domestic electrodeposited nickel narrowed. As end-user stockpiling willingness was relatively low ahead of the Labour Day holiday, combined with the sharp drop in futures prices this week, downstream purchase sentiment improved notably, and spot market transactions were fairly active.

On the macro front, US April PPI rose 6.0% YoY, far exceeding market expectations of 5.0%, marking the largest annual increase since 2022. Core PPI also rose unexpectedly, adding to inflationary pressure. Meanwhile, Kevin Warsh was officially confirmed by the Senate on Thursday as the 17th Chair of the US Fed, and market expectations for a near-term US Fed interest rate cut cooled sharply. On the Middle East situation, although US-Iran negotiations showed signs of easing, disruptions in the Strait of Hormuz persisted, and the sulfur supply crisis remained.

Inventory side, Shanghai Bonded Zone inventory was approximately 1,700 mt this week, flat WoW. China's social inventory was approximately 111,000 mt, with an inventory buildup of approximately 10,300 mt WoW.

The most-traded SHFE nickel contract is expected to trade in the range of 142,000-152,000 yuan/mt next week, with the price center shifting upward from this week. Key support comes from the floor underpinned by rising costs, while resistance comes from high inventory and macro uncertainties.