[SMM Nickel Midday Review] Nickel prices consolidated and rebounded on November 3, as oil prices plunged over 8% after the US-Iran breakthrough

SMM Nickel, November 3:

Macro and market news:

(1) US-Iran diplomatic breakthrough, oil prices plunged more than 8%. Iran said that if the US accepts conditions such as lifting port blockades and easing oil sanctions, the Strait of Hormuz could be reopened within two days; overnight Brent crude fell 8.23% to $104.1/barrel, WTI fell 7.73% to $96.08/barrel, and the earlier "inflation trade" logic cooled significantly. Gold rebounded 1.8% from one-year lows to $3,946.47/ounce.

(2) US midterm elections vote today. Early voting exceeded 50 million ballots, a record high, and the election results will affect the subsequent fiscal policy and the game path of US Fed policy, with strong wait-and-see sentiment in the market. In US stocks, Apple's Q4 revenue of $114.48 billion beat expectations, and AMD reported earnings after the close.

(3) A-shares rebounded from oversold levels on Monday, with the CSRC stabilizing the market and expectations. The Shanghai Composite rose 1.08% to 3,638 points, and the STAR 50 surged 3.11%; the third operation of swap facilities was launched, with 31 institutions applying for more than 100 billion yuan, and domestic risk appetite recovered somewhat.

Spot market:
On November 3, the average price of SMM #1 refined nickel was 118,650 yuan/mt, down 250 yuan/mt from the previous trading day. In terms of spot premiums, the average premium for Jinchuan #1 refined nickel was 3,700 yuan/mt, flat from the previous trading day, and the range for mainstream domestic brands of electrodeposited nickel was -300 to 600 yuan/mt.

Futures market:
The most-traded SHFE nickel contract (2612) consolidated and rebounded in early trading, closing the morning session at 116,790 yuan/mt, up 0.76%.

Short-term outlook:
With a turning point in the war, the decline in oil prices boosted market risk appetite to some extent, and SHFE nickel rebounded in early trading, but its own pattern of high inventory and weak demand remains unchanged. Going forward, attention remains on production cuts and the US midterm elections. In the short term, the most-traded SHFE nickel contract is expected to trade in the range of 116,000-119,000 yuan/mt.