[SMM Nickel Midday Review] Nickel Prices Staged a Strong Rebound on May 27, as Renewed U.S.-Iran Conflict Left Uncertainty over Navigation through the Strait of Hormuz

SMM Nickel News, May 27:

Macro and market news:

(1) Data from the NBS showed that from January to April, profits of above-designated-size raw material manufacturing industries were up 88.1% YoY, accelerating by 10.2 percentage points from January-March, boosting profits of all above-designated-size industrial enterprises by 10.3 percentage points.

(2) Iran: The US and European economies are highly dependent on energy prices and vulnerable to changes in regional situations. This pressure leverage puts the US in a "requesting" position when it comes to reaching a deal with Iran.

Spot market:

On May 27, SMM #1 refined nickel prices rose 3,100 yuan/mt from the previous trading day. Spot premiums: Jinchuan #1 refined nickel averaged 1,100 yuan/mt, flat from the previous trading day, while premiums for mainstream domestic electrodeposited nickel brands ranged at -500-500 yuan/mt.

Futures market:

The most-traded SHFE nickel 2606 contract opened higher and continued to rise, rebounding notably from the previous day, closing at 144,690 yuan/mt in the morning session, up 1.91%.

Minor clashes between the US and Iran resumed, and uncertainties persist over the Strait of Hormuz, driving a rebound in nickel prices. The current Middle East situation alternates between "ceasefire agreements — violations — peace talk expectations," intensifying nickel price fluctuations. Nickel prices are currently supported by costs on the downside while capped by inventory buildup on the upside. The most-traded SHFE nickel contract is expected to trade within the range of 137,000-145,000 yuan/mt in the short term.