SMM Nickel Market Morning Comment (Aug 26)

Last week, nickel prices showed a strong overall performance, rebounding to 130,720 yuan/mt by Friday's close, returning to the 130,000 yuan/mt range. The nickel price trend was mainly influenced by both macroeconomic sentiment and industry fundamentals. From a macro perspective, as September approached, market expectations for a rate cut gradually heated up, especially after dovish statements from Fed Chairman Powell and other officials, leading investors to widely anticipate a rate cut in September. Data showed that the number of initial jobless claims in the US for the week ending August 17 was 232,000, higher than the expected 230,000, with the previous value revised from 227,000 to 228,000. Similarly, the US Bureau of Labor Statistics revised down the number of non-farm employment additions for the year ending March 2024 by 818,000, marking the largest adjustment in fifteen years. These indicate a cooling job market, further reinforcing market expectations for Powell's dovish speech on the evening of August 23, thereby driving the trading logic for a rate cut in September. On the fundamentals side, last week, nickel ore prices in the Philippines continued to rise. With the rainy season approaching in the fourth quarter, downstream pre-stocking demand remained strong, supporting ore prices. Additionally, in Indonesia, due to no further progress in RKAB, downstream nickel ore inventories were low, while restocking demand persisted, supporting Indonesian nickel ore prices. In the midstream smelting sector, refined nickel maintained normal scheduled production last week, but import volumes decreased due to the recovery of the SHFE/LME nickel price ratio. According to an SMM survey, resources under some overseas long-term contract orders are expected to be delayed in August due to shipping schedule issues, leading to lower-than-expected overall nickel plate supply, although supply remains in surplus. On the downstream demand side, purchasing enthusiasm was low, affected by rising nickel prices and the completion of previous pre-stocking. Currently, end-users have no urgent procurement needs, with some end-user inventories stocked for the end of September. Overall, current nickel prices may still have room to rise driven by macro news, but fundamental risks remain.