[SMM Analysis] LME nickel fell before recovering during the National Day holiday, macro pressure has not yet been lifted, and refined nickel demand after the holiday still needs to be verified

During the National Day holiday, the Chinese refined nickel market suspended quotations, while overseas nickel prices extended their pre-holiday weakness before staging a modest recovery.As of the October 6 close, LME nickel prices remained below the September 30 level. During the holiday, weakening US employment data eased market concerns about near-term rate hikes, but inflation pressure in Europe and the US and elevated US Treasury yields continued to constrain metal prices. Taking into account inventories outside China, spot discounts, and pre-holiday conditions in the Chinese market, the post-holiday refined nickel market is expected to consolidate on a subdued note, with the pace of downstream purchasing recovery serving as a key gauge of whether prices can stabilize.

On the last working day before the National Day holiday, September 30, SMM #1 refined nickel was quoted at 121,500-125,700 yuan/mt, averaging 123,600 yuan/mt, down 1,100 yuan/mt from the previous trading day. Jinchuan nickel premiums averaged 3,750 yuan/mt, while mainstream electrodeposited nickel premiums ranged from a discount of 200 yuan/mt to a premium of 500 yuan/mt. Prices fell for consecutive sessions ahead of the holiday, with procurement gradually winding down and spot trades turning quiet.

Outside China, LME nickel closing prices fell from $15,920/mt on September 30 to $15,610/mt on October 1, and further to $15,530/mt on October 2; they then rebounded to $15,645/mt and $15,670/mt on October 5 and 6, respectively. As of October 6, prices were down a cumulative $250/mt from pre-holiday levels, a decline of about 1.57%; versus the October 2 close, they rebounded about 0.90%.Overall, the market showed a pattern of initial decline followed by a modest recovery, with the latter-half rebound not yet recouping the losses from the early part of the holiday.

On the macro front, cooling US employment was a key development. Nonfarm payrolls for September, released on October 2, rose by only 29,000, with the unemployment rate edging up to 4.2%; July and August payroll gains were revised down by a combined 60,000. Average hourly earnings rose 0.1% MoM and 3.0% YoY. The softer employment and wage data gave the US Fed room to wait for more data and helped ease concerns about further near-term policy tightening. However, the slowdown in employment also signals demand-side pressure on the economy, and the impact on industrial metals still needs to be assessed in light of actual demand. Meanwhile, inflation pressure has not receded in tandem. The US September ISM manufacturing PMI, released on October 1, came in at 54.5, with the prices index rising to 77.9, up 6.8 percentage points MoM; the ISM services PMI, released on October 5, came in at 54.9, with the prices index rising to 74.0, up 1.4 percentage points MoM. Both sectors continued to expand, with cost pressure rising further, limiting the extent to which weak employment data could ease policy expectations. Data released by the US Fed showed that the 10-year US Treasury yield remained at 5.31% on October 5, slightly higher than the 5.29% on September 30, indicating that long-term interest rate pressure has not yet clearly eased.

On the nickel fundamentals side, inventories outside China edged down, but no clear signs of spot tightness have emerged. As of October 6, LME nickel inventory stood at 284,178 mt, down 504 mt from September 30, a decline of about 0.18%. The limited inventory decline is not enough to support a judgment that supply and demand for refined nickel outside China has clearly strengthened. In China, as of September 30, SMM refined nickel social inventory across six locations stood at 123,783 mt, down 461 mt from September 24.

According to SMM holiday reports,as newly approved RKAB quotas gradually entered the market, Indonesian nickel ore prices weakened compared with end-September. On October 7, Indonesian officials proposed considering regulating smelter capacity utilization rates amid persistent oversupply in the global nickel market. The relevant pricing basis is still being calculated, and specific measures and implementation scale have not yet been clarified.


 

Compared with the outlook on September 30, weak employment data during the holiday has created the possibility of easing macro pressure, but high interest rates, inflation pressure, and nickel market inventory constraints remain. The pre-holiday judgment that room for price rebound is limited has not fundamentally changed. If the remaining LME trading on October 7 does not show a clear rebound, SHFE nickel and domestic spot prices after the holiday will face pressure to follow the LME lower; low prices may attract some restocking, but whether restocking can be sustained and drive inventory destocking still needs to be verified by actual transactions.

Spot premiums need to be assessed separately based on brand-specific supply and demand. Before the holiday, Jinchuan nickel premiums were relatively firm; after the holiday, if procurement recovers, they may receive some support. Whether mainstream electrodeposited nickel premiums can improve will depend on arrivals, available supply, and downstream transactions.The refined nickel market is expected to consolidate on a subdued note in the early post-holiday period, with focus on whether low-price procurement expands, domestic inventory changes, and further progress on overseas interest rates and Indonesian policy. If procurement recovers and drives continued destocking, the foundation for price stabilization will strengthen; if demand recovery is limited, short-term rebounds may still be constrained by inventory and macro pressure.