[SMM Nickel Midday Review] Nickel prices drifted higher on Sep 18, BoJ raised rates by 25 basis points

SMM nickel, September 18:

Macro and market news:

(1) After the rate hike landed, US stocks rebounded across the board as the "bad news exhausted" trade played out. Overnight, the Dow rose 0.61%, the S&P 500 gained 1.14%, the Nasdaq advanced 1.69%, and the Philadelphia Semiconductor Index surged 3.14% (Arm up 8%, Intel up 7%, AMD/SanDisk up 6%); the 10-year Treasury yield pulled back from 5.02% to 4.94%, and the US dollar index edged down to 100.22. After the market digested the hawkish dot plot, risk appetite recovered, and European stocks also closed higher.

(2) The Bank of Japan announced its decision at midday today, hiking rates by 25 bp to 1.25%, the highest policy rate since 1995 (31 years). With this, the US Fed, ECB, and BOJ have completed this round's "super central bank week" triple tightening, while the Bank of England held steady but warned it would hike if Middle East conflict pushes inflation higher.

(3) Oil prices pulled back as Middle East supply concerns eased. Saudi Arabia started repairing damaged pipelines and increased supply through ship-to-ship transfers, and Trump said the US is "close to the end of the Iran war" and will meet GCC leaders on the sidelines of the UN General Assembly next week; overnight WTI fell 1.31% to $101.09/bbl, Brent fell 0.95% to $104.80, and US crude briefly opened lower with a gap of more than 4% this morning. Gold rebounded 1.82% to $4,342/oz.

Spot market:
On September 18, the average price of SMM #1 refined nickel was 125,750 yuan/mt, up 350 yuan/mt from the previous trading day. In terms of spot premiums, the average for Jinchuan #1 refined nickel was 4,350 yuan/mt, up 100 yuan/mt from the previous trading day, and mainstream domestic electrodeposited nickel brands ranged from 0 to 500 yuan/mt.

Futures market:
The most-traded SHFE nickel contract (2610) retreated after a rapid rise in the morning session, closing the morning at 123,640 yuan/mt, up 0.62%.

Short-term outlook:
After the US Fed's rate hike landed, global risk appetite recovered, and macro pressure eased for the time being; SHFE nickel's rebound momentum is mild, and with nickel's own high inventory and weak demand pattern unchanged, in the short term, the most-traded SHFE nickel contract price is expected to trade in the range of 122,000-126,000 yuan/mt.

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