[SMM Nickel Midday Review] Nickel prices rebounded on September 1, as the US-Iran conflict escalated further and oil prices surged.

SMM Nickel September 1 News:

Macro and Market News:

(1) Expectations for a US Fed rate hike in September have surged. Following Warsh's hawkish remarks at Jackson Hole, CME FedWatch showed the probability of a 25 bp hike in September rising above 60%, and the swap market has priced in about 60 bp of tightening over the coming year. Both copper-nickel-zinc alloy and Societe Generale expect 25 bp hikes in September and December. The 10-year US Treasury yield rose to 4.756% (the highest since January 2025).

(2) The US-Iran conflict escalated further, sending oil prices sharply higher. On August 30, US forces struck Iranian launch sites on Larak Island, and Iran retaliated by targeting US military positions in Jordan and the UAE and shooting down an MQ-9 drone; an oil tanker in the Strait of Hormuz was hit by a projectile. Overnight, WTI rose 3.19% to $85.40, and Brent rose 2.68% back above $90, with the geopolitical premium continuing to widen.

(3) China's August manufacturing PMI rebounded to 49.8% (+0.6 pct), with large enterprises returning to expansion at 50.6%, while small and medium-sized enterprises remained below the threshold; non-manufacturing was weak, the recovery was uneven, and market expectations for further policy support heated up. At the same time, property market reforms were implemented: tightening pre-sales, shifting to completed-home sales, and extending the maximum mortgage term to 40 years.

(4) Sticky eurozone inflation reinforced expectations for an ECB rate hike in September. Germany's August CPI rose 2.9% YoY (the highest since April), and Governing Council members explicitly stated that the case for a September hike is valid, with the market almost fully pricing it in; overnight, most European stocks pulled back, with Germany's DAX30 falling 1.17%.

Spot Market:
On September 1, the SMM average price of #1 refined nickel was 129,050 yuan/mt, up 1,800 yuan/mt from the previous trading day. In terms of spot premiums, the average for Jinchuan #1 refined nickel was 1,600 yuan/mt, up 100 yuan/mt from the previous trading day, while mainstream domestic electrodeposited nickel brands ranged from -200 to 500 yuan/mt.

Futures Market:
The most-traded SHFE nickel contract (2610) rebounded from lows in early trading, closing the morning session at 128,150 yuan/mt, up 0.51%.

Short-Term Outlook:

With rising expectations for US Fed rate hikes, geopolitical conflicts pushing up oil prices, and a weakening US dollar creating mixed signals, the pattern of high inventory and weak demand remains unchanged. In the short term, the most-traded SHFE nickel contract is expected to trade in the range of 126,500-130,000 yuan/mt.