[SMM Nickel Midday Review] Nickel prices retreated after rapid rise on September 24, with the 10-year US Treasury yield breaking 5%

SMM nickel, September 24:

Macro and market news:

(1) President Xi Jinping arrived in Washington, where Donald Trump and his wife went to the airport to greet him, and the China-US summit officially took place today. This is Xi Jinping's first state visit to the US in 11 years. The market is focused on outcomes related to tariffs, technology controls, agricultural purchases, rare earths, and AI, with sectors such as foreign trade, semiconductors, and agriculture highly sensitive to signals from the meeting.

(2) The US September PMI far exceeded expectations, and US Treasuries were "bloodbath." The preliminary September composite PMI came in at 58.4, a five-year high, with new orders expanding at the fastest pace since April 2022 and the input cost index at its highest since October 2022. The strong data reignited rate hike expectations: the 5-year Treasury yield broke above 5% for the first time since 2007, the 10-year rose above 5.1% (a nearly 19-year high), and the 30-year hit its highest since 2004; the US dollar index broke above 101 to a new high since end-July. CME showed the probability of an October rate hike rose to 69.7%, and the probability of a cumulative 50 bp hike by December was 54.8%. The US Treasury will buy back up to $6 billion of long-term bonds today to calm the bond market.

(3) Iran took a tough stance, and oil prices ended a five-day losing streak to rebound. Iran's president said in his UN speech that he is willing to negotiate but will not accept threats from major powers, and the secretary of the Supreme National Security Council said the Strait of Hormuz will not reopen until conditions are met; Brent crude closed up nearly 4% back above $100. There were also reports that the Trump administration was considering a diesel export ban (later denied by the White House), and US diesel futures fell 5% at one point.

Spot market:
On September 24, the average price of SMM #1 refined nickel was 126,900 yuan/mt, down 1,000 yuan/mt from the previous trading day. In terms of spot premiums, the average for Jinchuan #1 refined nickel was 3,700 yuan/mt, down 50 yuan/mt from the previous trading day, and the range for mainstream domestic brands of electrodeposited nickel was 0-500 yuan/mt.

Futures market:
The most-traded SHFE nickel 2610 contract shot up and then pulled back in early trading, closing the morning session at 124,830 yuan/mt, down 0.87%.

Short-term outlook:
Overnight, the blowout US PMI pushed Treasury yields across the board above 5%, significantly intensifying macro pressure. Ahead of the Mid-Autumn Festival, neither bulls nor bears were willing to hold large positions, and SHFE nickel continued its trend of position reduction overall, weakening under pressure from its own high inventory and sluggish demand. In the short term, the most-traded SHFE nickel contract is expected to trade in a range of 124,000-127,000 yuan/mt.