[SMM Nickel Midday Review] On August 6, affected by news of supplementary nickel ore quotas in Indonesia, nickel prices suddenly tumbled intraday.

SMM Nickel, August 6:

Macro and Market News:

(1) The US ADP employment for July came in at 44,000, below the market forecast of an increase of 70,000 and the downwardly revised 95,000 for June, marking the smallest gain since January this year.

(2) Middle East situation—① Iranian Foreign Ministry: Close to reaching a strait agreement with Oman; two existing shipping lanes in the strait will be closed. The new shipping lane entering the Strait of Hormuz and part of the voyage out of the strait will pass through Iranian territorial waters. However, the new lane is also a temporary route, expected to be usable for 2 to 4 months. The Iranian foreign minister or parliament speaker has no plans to visit Pakistan or Qatar.

Spot Market:

On August 6, SMM #1 refined nickel averaged 131,450 yuan/mt, up 800 yuan/mt from the previous trading day. As for spot premiums, Jinchuan #1 refined nickel averaged 1,150 yuan/mt, flat from the previous trading day, while the range for mainstream domestic electrodeposited nickel brands was -200 to 400 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (2609) plunged in the morning session, ending the morning at 128,230 yuan/mt, down 2.10%.

Hit by the sudden news that a large Indonesian mine is expected to significantly increase RKAB quotas, nickel prices fell sharply, reversing from gains to declines during the day, erasing earlier market expectations of quota tightening in Indonesia. Nickel prices are expected to be in the doldrums in the short term, and the extent of quota supplements from other miners needs to be monitored.