[SMM Nickel Midday Review] Nickel prices continued to fall before the holiday on September 29, as US Treasury yields breaking 5.2% continued to pressure nonferrous metals

SMM Nickel, September 29:

Macro and market news:

(1) The State Council executive meeting deployed incremental policies to stabilize the real estate sector and boost employment. Li Qiang chaired a State Council executive meeting on September 28, calling for stronger counter-cyclical macro policy adjustments, the rollout of a batch of pragmatic and effective incremental policies, full use of local government debt carryover limits, and the study and introduction of policy measures to stabilize the real estate market and promote employment and income growth. The PBoC and seven other departments simultaneously launched 19 financial measures to support the expansion and quality improvement of the service sector, while Shanghai introduced new property market policies to comprehensively strengthen pre-sale management and orderly implement completed-home sales.

(2) US-Iran talks hit an impasse, and oil prices saw wild swings before closing higher. Iran denied showing flexibility on the nuclear issue, and Trump also denied having proposed easing sanctions in exchange for nuclear progress. Overnight, crude oil surged more than 5% intraday, then plunged after reports of "sanctions relief," with WTI ultimately closing up 0.21% at $92.6/bbl and Brent up 0.92% at $105.28. The Saudi pipeline that was attacked has restored half of its capacity. Iran expects a high likelihood of escalating conflict after the US midterm elections.

(3) US Treasury yields hit new highs again, and gold and silver tumbled. The 10-year US Treasury yield rose to 5.24% (a new high since 2007), and the 2-year yield reached 4.93%. COMEX gold fell more than 4% intraday and closed down 3.52% at $4,135.4/oz, a near eight-week low, while silver dropped 4.71%.

Spot market:
On September 29, the SMM average price of #1 refined nickel was 124,700 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 100 yuan/mt from the previous trading day, while mainstream domestic electrodeposited nickel brands ranged from -200 to 500 yuan/mt.

Futures market:
The most-traded SHFE nickel 2610 contract opened lower and moved lower in the morning session, closing the morning session at 122,570 yuan/mt, down 0.73%.

Short-term outlook:
With the holiday approaching, market sentiment is cautious. On the macro front, high US Treasury yields and high oil prices are severely weighing on sentiment across the nonferrous metals sector. The pattern of high SHFE nickel inventory and weak demand remains unchanged. Today saw position-building-driven declines. In the short term, the most-traded SHFE nickel contract is expected to trade in the range of 122,000-126,000 yuan/mt.