Nickel Market Declines Overall, Transactions Remain Sluggish [SMM Analysis]

The Nickel Market Declined Overall, With Sluggish Market Transactions

This week, nickel prices continued to decline, with spot prices fluctuating between 124,100-129,150 yuan/mt, while SHFE nickel futures prices ranged from 123,000 yuan/mt to 127,950 yuan/mt.

Market news indicated that Indonesia has approved a 2025 nickel ore quota of 290 million mt. Officials mentioned controlling nickel ore production to raise prices and ensure profitability for the domestic nickel industry, providing some support for nickel prices. Additionally, the Philippines is attempting to emulate Indonesia's "ore export ban" policy. Although the short-term impact is limited, it has raised concerns about future supply, leading to a brief increase in nickel prices earlier this week.

Fundamentally, supply side, most factories were operating at partial capacity after the holiday, and February refined nickel production is expected to slightly decrease MoM, though overall supply remains ample. Demand side, despite a gradual recovery in downstream demand, overall transactions remained sluggish, with low market purchasing enthusiasm.

As of February 14, the premium/discount for Jinchuan brand nickel was 2,000-2,100 yuan/mt, averaging 2,050 yuan/mt. With the Two Sessions approaching, market sentiment is expected to dominate the premium/discount trend next week, potentially causing slight fluctuations.

In summary, although policy uncertainties in Indonesia and the Philippines provided some support for prices, weak demand limited the upward potential for nickel prices, and the supply-demand surplus persisted. In the short term, nickel prices are expected to continue fluctuating at low levels. Investors should monitor the implementation of Indonesian policies and the actual recovery of downstream demand. Spot nickel prices are expected to fluctuate within the range of 124,400-130,100 yuan/mt, while futures prices are projected to range between 124,500-128,000 yuan/mt.

Bonded Zone Inventory Increased During the Week
In terms of inventory, according to the latest SMM survey data, bonded zone nickel inventory this week was 5,600 mt, up 200 mt WoW.

Inventory
SMM's six-region inventory totaled 49,459 mt, up 4,768 mt WoW. Overall, downstream transactions remained sluggish. With factories gradually resuming operations, transaction volumes are expected to improve by March, at which point domestic nickel inventory may begin destocking.