SMM Morning Comment For Nickel Market On November 27

SHANGHAI, November 27(SMM) –On the macro front, the US initial jobless claims fell to 209,000, below the expected 226,000 and marking a new low since October 14. That was the first drop in two months. The labor market isn't cooling down as fast as anticipated. It's also important to note the US dollar index bouncing back from its lowest point in two and a half months. Overall, macro factors aren't pressuring nickel prices much, but last week, nickel continued its decline, slipping below 130,000 yuan/mt. From a fundamentals perspective, the ongoing downward trend in nickel prices is primarily driven by the persistent oversupply of pure nickel. In terms of production, domestic pure nickel output increased by about 34% year-on-year in 2023. It's noteworthy that refined nickel output grew by only 4.4% in 2023, while electrowinning nickel output increased approximately twelvefold compared to the previous year. Based on SMM research, companies primarily producing electrowinning nickel have not reduced or halted production, and the supply of pure nickel has not diminished despite the downward trend in nickel prices. On the demand side, there was a slight improvement in spot market transactions last week, but overall demand remains weak. Demand for nickel plates in the alloy industry declined, but the decrease is better than expected. Additionally, as inventory has already been somewhat depleted, downstream companies are gradually initiating essential purchases. In the stainless steel sector, overall, there is still an expectation of reduced production in the 300-series stainless steel. However, due to the resumption plan of a certain steel mill, it is anticipated that the demand on nickel raw material will increase this week, playing a role in boosting pure nickel demand to some extent. In summary, the current macro sentiment remains positive, but there is no significant positive event to drive nickel prices upward. From a fundamental perspective, there is a continuous increase in the supply of pure nickel, but the growth in downstream demand is limited.