Nickel prices consolidated higher this week. Supply pressure on production water due to El Nino-induced drought in Indonesia and growing expectations of nickel pig iron production disruptions at the IMIP industrial park drove the most-traded 2610 contract up about 1.0% for the week. The LME nickel 3M contract strengthened in tandem, up about 1.6% WoW. In the spot market, SMM #1 refined nickel averaged 126,725 yuan/mt this week, up 1,625 yuan/mt WoW. Jinchuan refined nickel premiums ended nine consecutive days of one-way widening, narrowing steadily through the week from 4,100 yuan/mt to 3,700 yuan/mt. Mainstream electrodeposited nickel premiums held steady in the 0-500 yuan/mt range all week. In spot trading, downstream users mainly made just-in-time procurement early in the week. After prices rebounded mid-week, wait-and-see sentiment intensified, limiting the release of pre-holiday stockpiling demand.
On the macro front, China-US economic and trade consultations were held in New York on September 19-23. He Lifeng led a delegation to the US to pave the way for the September 24 China-US presidential meeting, with topics covering AI, tariffs, and critical minerals. Risk appetite recovered notably on expectations of the meeting. Domestically, the September LPR was left unchanged (1-year at 3.00%, 5-year at 3.50%). Both onshore and offshore yuan strengthened past 6.70, hitting their highest levels since January 2023.
On the inventory front, Shanghai Bonded Zone inventory stood at about 1,900 mt this week, flat WoW. Domestic social inventory was about 124,000 mt, destocking by about 600 mt WoW.
Nickel prices are currently caught between "Indonesian NPI production cuts + cost support" and "US Treasury yields above 5% + high inventory pressure." The market showed clear position reduction ahead of the Mid-Autumn Festival and National Day holidays. The most-traded SHFE nickel 2610 contract is expected to trade in a core range of 123,000-127,000 yuan/mt after the holiday.
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