[SMM Nickel Midday Review] Nickel prices weakened on Sep 28, with the 10-year US Treasury yield briefly surging above 5.2%

SMM Nickel, September 28:

Macro and market news:

(1) The China-US presidential meeting reached eight-point consensus. Both sides agreed to build a "constructive strategic stability relationship between China and the US based on respect, fairness, and reciprocity"; on trade, they reached a "$30 billion" reciprocal tariff reduction arrangement, established and advanced a trade council mechanism, extended the Kuala Lumpur consultation outcomes, and instructed implementation; agreed to establish a China-US AI dialogue (next dialogue in November) and an AI incident communication channel; presidential mutual visits to APEC/G20 meetings were put on the agenda. The overall tone of the meeting was positive, but the "buy the expectation, sell the fact" characteristic was evident.

(2) US-Iran negotiations were volatile, with oil prices falling first and then rebounding. The prospect of reopening the Strait of Hormuz briefly knocked down oil prices. Last Friday, WTI fell 2.33% to $92.41/barrel (down nearly 4% for the week, the largest weekly decline in seven weeks); however, Trump rejected Iran's "seven-day ceasefire proposal" and said he was "always considering" resuming military strikes. Negotiations are expected to continue this week, and WTI rebounded 1.19% at Monday's open to $93.51. Iran said it was prepared for the resumption of hostilities but had not abandoned diplomatic channels.

(3) US Treasuries had their worst week in 19 months. Last Friday, the 10-year Treasury yield surged above 5.22% intraday (a new high since 2007), and the 30-year broke above 5.5% (a new high since 2004), rising for four consecutive weeks; Japanese and US officials sent signals that "a weak yen is problematic," and the yen rebounded more than 1% intraday. US stocks stopped falling and rebounded on Friday, with the Dow up 0.93% and the S&P 500 up 0.51%. Gold futures halted a four-day losing streak but still fell more than 2% for the week.

Spot market:
On September 28, the average price of SMM #1 refined nickel was 125,700 yuan/mt, down 1,200 yuan/mt from the previous trading day. In terms of spot premiums, the average for Jinchuan #1 refined nickel was 3,800 yuan/mt, up 100 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 contract (2610) opened lower and moved lower in early trading, closing the morning session at 123,640 yuan/mt, down 1.21%.

Short-term outlook:
With US Treasury yields surging above 5.2% and a strong US dollar, macro pressure regained dominance. Combined with a large LME inventory buildup during the Mid-Autumn Festival holiday, SHFE nickel opened with a catch-up decline today. Funds may maintain a wait-and-see sentiment on the last trading day before the holiday. In the short term, the most-traded SHFE nickel contract is expected to trade in the range of 123,000-126,000 yuan/mt.