[SMM Nickel Midday Review] Nickel prices retreated after rapid rise on October 9, US Fed's Waller said timing of rate hikes can be flexibly managed

SMM, October 9 – Nickel:

Macro and market news:

(1) US Fed officials continued their hawkish tone, but the pace of interest rate hikes is slowing. Waller said further hikes are still needed to push inflation back down to 2%, but there is no need to hike at consecutive meetings and the timing can be flexible; the dot plot reflects a rate cut after hikes in early 2027. Musalem said rates should be raised over the next 6-9 months. Market pricing for an October hike remains low, with focus shifting to upcoming inflation data.

(2) Oil prices surged more than 3% on a double supply shock. A hurricane approaching the Gulf of Mexico shut in about 512,000 bbl/day of crude oil and 16% of natural gas capacity, with Shell and Chevron evacuating non-essential personnel. Meanwhile, an "illegal tanker" struck a mine and exploded in the southern lane of the Strait of Hormuz (Iran said it would block "illegal" shipping lanes), and the US imposed a new round of sanctions on Iran involving 17 oil tankers. Overnight, WTI crude rose 3.29% to $91.18/bbl, and Brent rose 3.73% to $103.94, back above $100.

(3) China: The PBoC issued its stance on RMB exchange rate policy – adhering to the market's decisive role, not presetting a target exchange rate level, not intervening in long-term trends, and maintaining two-way flexibility. Emmanuel Bonne, diplomatic advisor to the French President, will visit China from October 9 to 13 for the China-France Strategic Dialogue.

Spot market:
On October 9, SMM #1 refined nickel averaged 121,650 yuan/mt, down 550 yuan/mt from the previous trading day. In terms of spot premiums, Jinchuan #1 refined nickel averaged 4,150 yuan/mt, up 150 yuan/mt from the previous trading day, while mainstream domestic electrodeposited nickel brands ranged from -200 to 400 yuan/mt.

Futures market:

The most-traded SHFE nickel contract (2611) opened higher in early trading, then retreated after a rapid rise, closing the morning session at 119,260 yuan/mt, down 0.24%.

Short-term outlook:
Oil prices surged, US Treasury yields stayed high, and rate-hike trades heated up. Today's nickel price rebound and pullback highlights that its own fundamentals of high inventory and weak demand still dominate the trend. In the short term, the most-traded SHFE nickel contract is expected to trade in the range of 118,000-122,000 yuan/mt, with the rebound driven mainly by technical repair.