SMM Morning Comment For  Nickel Market On December 18

SHANGHAI, December 18 (SMM) –
Nickel prices saw a slight retreat last week, closing at 132,080 yuan/mt. Despite a minor decline in nickel prices, the drop in nickel sulphate was more significant, leading to an expansion of the price difference between nickel sulphate and pure nickel to around 15,000 yuan/mt. However, the actual transaction price difference in the spot market is even larger, primarily due to the continuous decrease in the nickel sulphate coefficient. According to SMM research, electrowinning nickel companies are currently inquiring about nickel salt prices due to a price difference exceeding ten thousand yuan. On the macro level, on the evening of December 13, the Federal Reserve announced that it would hold the key federal funds rate in a target range between 5.25%-5.5%, in line with market expectations. The recent dovish remarks from the Federal Reserve, combined with the latest dot plot, strongly suggest that the current interest rates may have already reached or come close to the peak of the Federal Reserve's current cycle of rate hikes. This has led to increased market expectations of three rate cuts next year, each potentially being a 0.25 percentage point reduction. In terms of fundamentals, pure nickel production is expected to rebound in December compared to November, mainly because some enterprises reduced production in November due to equipment maintenance. It is anticipated that maintenance will be completed in December, leading to a recovery in production. From the demand side, military orders for alloys remain steady, but civilian orders have dropped compared to before. Therefore, the support for pure nickel is limited. In December, there was an increase in production of 300 series stainless steel by some major factories, and some companies ramped up their scheduling. As a result, compared to October, there is increased support from steel mills for pure nickel. The electroplating orders remained relatively stable since entering Q4, with no significant growth observed so far. In summary, the current macro positive sentiment is supporting nickel prices, but there is still pressure on nickel prices from the fundamental perspective.