2024 Spring Festival Nickel Market Review and Post-holiday Outlook [SMM Analysis]

[SMM Analysis: Review of the 2024 Spring Festival Nickel Market and Post-holiday Outlook] Before the holiday, the domestic pure nickel production did not decrease but increased, and the downstream reserve volume was considerable, but from the perspective of inventory, the trend of domestic accumulation has not been improved.

SMM February 18:

Before the holiday, the domestic pure nickel production did not decrease but increased, and the downstream reserve volume was considerable, but from the perspective of inventory, the domestic accumulation trend has not been improved, reflecting that the terminal consumer demand is less than optimistic expectations. From February 9 to February 18, it is the traditional Chinese New Year holiday, and Shanghai nickel trading is suspended. In terms of overseas markets, affected by Indonesia's nickel ore quota, the LME continued to rise during the holiday, reaching a maximum of US$16,590/ton.

On the macro front, the Indonesian general election has confirmed Prabowo to be elected president, and the RKAB audit is expected to gradually get on track, but the review speed is slow, and the supply of nickel raw materials may be tight in the short term. In addition, the non-seasonally adjusted CPI in the United States recorded 3.1% in January during the holiday season, compared with 3.4% in the previous month, much higher than the Fed's long-term inflation target of 2% and higher than the consensus expectation of 2.9%. Excluding volatile food and energy prices, the core CPI rose 0.4% month-on-month, an increase of 0.1 percentage points from the previous month and a year-on-year increase of 3.9%. PPI in January increased by 0.9% year-on-year, compared with 1% in the previous month, and the slowdown was less than market expectations. As a result, inflation expectations were raised to 3% in February, reinforcing the market's probability that the Fed will not rush to cut interest rates. And on Friday, Fed officials said that three Fed rate cuts this year are "reasonable baseline" expectations, but there are two risks to consider a slowdown in progress in reducing inflation and a sudden sharp deterioration in the labor market. From a fundamental point of view, some enterprises in the upstream and downstream of the nickel industry chain in the section produce at a low operating rate, and the market activity is low. According to SMM research, the downstream will resume work and production after the holiday, and it is predicted that the domestic spot market will begin to recover from next week. However, considering the increase in production during the Spring Festival, some downstream companies have booked raw materials with upstream nickel factories before the holiday, so the production in the first week after the holiday may consume the previous inventory and scheduled raw materials, so it is expected that the social inventory of pure nickel in the first week after the holiday will remain unchanged, and the price of pure nickel will be affected by the interweaving of long and short or the shock will be strong.

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