SMM Morning Comment For Nickel Market On November 6

SHANGHAI, November 6(SMM) –On the macro front, the Fed Reserve said in a statement that it will keep key rates unchanged at 5.25-5.50% last Thursday evening. Fed Chair Powell mentioned, "slowing down is giving us I think a better sense of how much more we need to do. If we need to do more." This indicates that the current inflation hasn’t yet reached the desired level of 2%, with the Personal Consumption Expenditures Price Index, a key inflation metric for the Fed, showing a 3.4% year-on-year increase in September, significantly higher than 2%. Therefore, the Fed hasn’t moved towards lowering interest rates. Additionally, last week, the Ministry of State Security mentioned the need to be cautious of "short sellers", "bearish speculators", "fearmongers", and "asset strippers". Due to positive macro sentiment, SHFE nickel rebounded on last Friday. Looking at the fundamentals, social inventories of nickel increased by over 1,000 mt last week. Pure nickel inventories have been increasing since the third quarter. This primarily stems from the continuous increase in production of electrowinning nickel. The new electrowinning nickel are cheaper compared to Norilsk nickel and are of a similar quality, leading to a decline in the competitiveness of Norilsk nickel in the spot market. Consequently, this has resulted in a continuous accumulation of inventories. Additionally, based on SMM research, some domestic nickel plate traders are currently unwilling to continue signing long-term agreements for Norilsk nickel due to the impact of electrowinning nickel. From the demand side, demand remained weak last week, with poor transactions in the spot market. The main reason is the high downstream buying sentiment in September, leading to ample nickel plate stocks in October. Earlier, nickel prices showed a downward trend, causing some downstream buyers to continue bearish on nickel prices. Consequently, with stocks yet to clear and the downstream sentiment staying negative, recent spot market transactions have been dull. In summary, the current nickel fundamentals remain weak, but the overall negative sentiment is easing. Additionally, downstream stocks are expected to decrease, combined with a potential nickel price rebound, leading to potential concentrated purchasing in the future.