[SMM Nickel Midday Review] Nickel prices fell on November 4 as US midterm election vote counting remained deadlocked

SMM Nickel, November 4:

Macro and market news:

(1) US-Iran negotiations remain volatile, cooling expectations for the strait reopening. Ali Shamkhani, secretary of Iran's Supreme National Security Council, said the US response to Iran's rights and demands was "not convincing," and that the Strait of Hormuz would only reopen if the US fully and clearly responded to Iran's seven conditions and implemented them. However, sources said both sides made concessions on nuclear issues and frozen assets. Oil prices retreated after a rapid rise, with WTI up 0.31% at $96.76/bbl, after falling more than 2% during the US session, while Brent fell 0.39% to $104.36/bbl.

(2) US midterm elections are underway, with results possibly days away. Forecasters widely expect Democrats to retake the House (JPMorgan estimates a 66% probability of a Democratic sweep of both chambers), while the Senate remains highly uncertain. With tight races in multiple states and mail-in ballot counting, final results may take days or even weeks to confirm, and risk appetite is unlikely to recover before the outcome is settled.

(3) China: The central bank will raise the foreign exchange reserve requirement ratio for financial institutions by 2 percentage points to 6% effective November 15, expected to freeze about $24 billion in FX liquidity. The State Council's financial work report was submitted for review, pledging to continue a moderately loose monetary policy and make good use of capital market support tools.

Spot market:
On November 4, SMM #1 refined nickel averaged 118,100 yuan/mt, down 550 yuan/mt from the previous trading day. In terms of spot premiums, Jinchuan #1 refined nickel averaged 3,700 yuan/mt, flat from the previous trading day, while mainstream domestic electrodeposited nickel brands ranged from -300 to 600 yuan/mt.

Futures market:
The most-traded SHFE nickel contract (2612) opened lower and moved lower in early trading, closing the morning session at 115,750 yuan/mt, down 1.08%.

Short-term outlook:
Volatile US-Iran negotiations have cooled optimism over the strait reopening, but the market remains relatively cautious during the US midterm elections. LME metals weakened across the board, dragging SHFE nickel lower. In the short term, the most-traded SHFE nickel contract is expected to trade in the 116,000-118,000 yuan/mt range.