SMM Nickel, September 3:
Macro and market news:
(1) US August "ADP employment data" came in surprisingly weak, slightly cooling bets on a September rate hike. ADP private-sector payrolls rose by only 38,000, the lowest since January this year. The US Fed's Beige Book showed mild economic expansion and mild price increases. New York Fed President Williams struck a cautious tone, saying inflation is pulling back slowly and rates are at a "good level," without sending a clear signal for a rate hike. The market currently prices in about a 65% chance of a hike at the September 15-16 meeting, and the policy path remains highly uncertain.
(2) The US-Iran conflict continued to escalate, with oil prices climbing above $95. Iran's Revolutionary Guard claimed missile and drone attacks on multiple US military bases in Kuwait, Jordan, and Iraq, and the US military subsequently completed a new round of strikes, expanding targets to mine-laying capabilities and communication sites. Trump said the strikes "won't last too long." Overnight, Brent crude rose 0.77% to $95.38/bbl, and WTI rose 0.45% to $90.63/bbl. The OPEC+ meeting on Sunday may keep October production quotas unchanged.
(3) US stocks snapped a three-day losing streak, and US Treasury yields pulled back across the board. The Dow rose 0.56% to 53,061.95 points, and the 10-year US Treasury yield fell back to 4.78%. The US dollar index fell 0.10% to 99.56. Bank of Japan hawkish board member Takata Sou said the next rate hike could exceed 25 basis points and did not rule out consecutive hikes. The yen surged 1.2% intraday, and a BOJ rate hike in September is now almost fully priced in.
(4) Most LME base metals fell, but nickel futures bucked the trend to close up 1.38% at $16,895/mt, while LME copper fell 0.27% to $14,236.5/mt. Domestically, PBOC Governor Pan Gongsheng said at the G20 that China will continue to implement a moderately loose monetary policy and has no intention of gaining a trade competitive advantage through currency depreciation.
Spot market:
On September 3, the average price of SMM #1 refined nickel was 129,700 yuan/mt, up 2,450 yuan/mt from the previous trading day. In terms of spot premiums, the average premium for Jinchuan #1 refined nickel was 1,600 yuan/mt, flat from the previous trading day, and mainstream domestic brands of electrodeposited nickel ranged from -200 to 500 yuan/mt.
Futures market:
The most-traded SHFE nickel 2610 contract opened higher and moved higher in the morning session, closing the morning session at 129,150 yuan/mt, up 2.01%.
Short-term outlook:
The surprisingly weak ADP employment data marginally cooled Fed rate hike bets and pulled the US dollar back. Overnight, LME nickel surged against the trend, driving SHFE nickel to open higher and move higher in the morning session. However, the US-Iran conflict has pushed up oil prices and increased inflation uncertainty, while nickel's own high inventory and weak demand pattern remain unchanged. In the short term, the most-traded SHFE nickel contract is expected to trade in the range of 127,000-132,000 yuan/mt.
