Nickel prices extended their upward trend this week. The most-traded SHFE nickel contract posted a "five-day winning streak" on its daily chart, decisively breaking through the 133,000 yuan/mt level and holding above it, with a weekly gain of over 2%. LME nickel rose in tandem to $17,500/mt, hitting a near one-month high. The drivers behind the nickel price rally remained the "Indonesia export control policy + Strait of Hormuz sulfur crisis + continuous LME inventory destocking." In the spot market, the average price of SMM #1 refined nickel was 131,440 yuan/mt this week, up 2,250 yuan/mt WoW. The premium for Jinchuan refined nickel weakened continuously this week, falling to 1,500 yuan/mt, while mainstream electrodeposited nickel was quoted at a discount between -300 and -500 yuan/mt. As futures prices continued to rebound, downstream purchasing interest remained low and was limited to just-in-time procurement. Overall spot market transactions were relatively sluggish.
On the macro front, geopolitical tensions remained elevated this week. The US military launched another strike on Iran, and President Trump stated he was "seriously considering" restarting large-scale combat operations against Iran. If the Strait of Hormuz remains blockaded, the difficulty of restoring Middle East sulfur supply will increase. Policy expectations for the US Fed's July FOMC meeting became clearer. The latest CME FedWatch Tool data showed a 65.3% probability of the Fed holding rates steady at the July meeting, versus a 34.7% chance of a 25bp hike, with a consensus forming for staying pat in July. The suppressive pressure from the macro front on non-ferrous metals marginally eased.
Inventory side, as for inventories, Shanghai Bonded Zone inventory stood at around 1,700 mt this week, flat WoW. China's social inventory was about 130 kt, reflecting a buildup of approximately 1,800 mt WoW.
LME's five consecutive days of destocking this week offered a positive signal, though absolute levels remained at historical highs. If the destocking trend persists, the foundation for a nickel price rebound will become more solid. The US-Iran conflict continues and could escalate, leaving sulfur supply risks in place, and the quantitative magnitude of supplementary RKAB quotas remains the key factor behind the subsequent nickel price trend. The core trading range for the most-traded SHFE nickel contract next week is expected to be 130,000-137,000 yuan/mt.
![[SMM Analysis] Downstream Purchase Willingness Weak; Intermediate Product Payables in the Doldrums This Week](https://imgqn.smm.cn/usercenter/NHXhQ20251217171733.jpg)
