[SMM Nickel Midday Review] Nickel prices declined on September 4, as the US-Iran conflict continued and oil prices remained firm at high levels

SMM nickel, September 4:

Macro and market news:

(1) Fed Governor Waller turned dovish, and expectations for a September rate hike cooled significantly. Waller said recent data finally showed signs of slowing inflation, and if data over the next two weeks continue this trend, he would lean toward supporting keeping rates unchanged in the 3.50%-3.75% range; but he also warned that if inflation data come in hot, a September hike remains possible. Overnight, US stocks rose for a second straight session, with the S&P 500 posting its biggest one-day gain in a month (+1.06%), the Dow up 1.18%, and the 10-year Treasury yield pulling back to 4.766%.

(2) Precious metals rallied sharply, with gold prices rebounding strongly. COMEX gold futures rose 2.39% to $4,520.30/oz, and silver gained 3.24%; Goldman Sachs expects central bank gold buying demand to push gold prices to $4,900/oz by the end of 2026. Cooling rate hike expectations plus increased buying by multiple central banks were the main drivers.

(3) US-Iran conflict continued, keeping oil prices firm at high levels. US Central Command said it had forced 87 merchant ships to reroute and disabled 3 vessels, continuing to implement the maritime blockade against Iran; Brent crude settled up 0.3% at $95.92/bbl, and WTI rose 0.73% to $91.67/bbl. Citi maintained its Q4 Brent forecast of $70, arguing that supply will be in surplus after the Strait of Hormuz reopens.

(4) LME base metals mostly rose, while nickel underperformed. LME copper futures rose 1.03% to $14,362/mt, tin futures gained 1.23%, while nickel futures edged down 0.05% to $16,905/mt, clearly lagging the sector. In China, the S&P China services PMI rose to 51.4 in August, and the composite PMI rose to 52.1; the 800 billion yuan new-type policy financial instruments began to be deployed.

Spot market:
On September 4, SMM #1 refined nickel averaged 129,050 yuan/mt, down 650 yuan/mt from the previous trading day. In terms of spot premiums, Jinchuan #1 refined nickel averaged 1,650 yuan/mt, up 50 yuan/mt from the previous trading day, while mainstream domestic brands of electrodeposited nickel were in the range of -200 to 500 yuan/mt.

Futures market:
The most-traded SHFE nickel contract (2610) consolidated and pulled back in morning trading, closing the morning session at 127,940 yuan/mt, down 0.60%.

Short-term outlook:
Waller's dovish remarks cooled September rate hike expectations, and the US dollar and Treasury yields pulled back, marginally easing macro pressure. However, overnight LME nickel edged lower against the trend and clearly underperformed copper and other base metals, while high inventory and weak demand patterns remained unchanged, leaving nickel prices with insufficient rebound momentum. In the short term, the most-traded SHFE nickel contract is expected to trade in the range of 127,000-131,000 yuan/mt.