SMM Nickel Market Morning Comment Fully (Mar 28)

Overnight, the most-traded SHFE nickel contract opened at 131,430 yuan/mt, and closed at 129,510 yuan/mt, down 2,270 yuan/mt. Trading volume rose 53,830 lots, and open interest decreased by 1,249 lots. From a macro perspective, the US Fed has kept the upper limit of its interest rate at 5.5%. The Fed once again maintained interest rates unchanged. Powell's speech has not disclosed when to cut interest rate. This interest rate decision will have little impact on the market. Fundamentally, the progress of nickel ore approval accelerated and production of intermediate product projects in Indonesia ramped up. The market's expectations for tight supply of raw materials began to weaken. On the other hand, affected by the sharp drop in nickel prices, transactions in the spot market picked up, and downstream purchasing sentiment recovered. Nickel price is expected to go down.

Nickel: During the trading session on March 27, the opening price of the main SHFE nickel contract was 131,430 yuan/mt, with a closing price of 129,510 yuan/mt, a decrease of 2,270 yuan/mt compared to the previous trading day's closing price. Trading within the session strengthened compared to the previous trading day, with an increase in trading volume by 53,830 lots and a decrease in open interest by 1,249 lots. This combination shows that both long and short parties have strong trading interests, but the short side is not willing to continue increasing positions. The decrease in open interest and prices indicates that the long side is eager to close positions, with apparent stop-loss behavior. Therefore, after a significant price decline, once the open interest increases, it indicates that the long side is starting to intervene again, and there is a higher probability of price rebound. From a macro perspective, the decision on the upper limit of the US Federal Reserve interest rate recorded 5.5% as of March 20. The Fed once again maintained its stance, and Powell's speech did not reveal any clear interest rate cut timing, so the impact of this interest rate decision on the market was relatively minor. On the fundamental side, progress in nickel mine approvals has accelerated, and Indonesian intermediate projects have begun to release output gradually, leading to a weakening of market expectations for tight raw material supply. However, influenced by the sharp decline in nickel prices, the spot market transaction atmosphere has warmed, and downstream purchasing sentiment has recovered. Overall, it is expected that nickel prices will continue to fluctuate weakly in the future.

NPI: On March 27, the average price of SMM 8-12% NPI was 933 yuan/mtu (factory including tax), a decrease of 0.5 yuan/mtu from the previous working day. From the supply side, although the approval speed of nickel ore quotas has recently accelerated significantly, it still takes time from the mine to the smelter, so it is expected that NPI production in March will still be at a low level. However, due to the sustained low demand in the domestic terminal, some traders and iron factories have lowered their quotations. From the demand side, the stainless steel terminal demand has continued to be weak this week, thus not providing support to the NPI. Overall, the current stainless steel terminal demand remains weak, leading to an accumulation of supply, and the current NPI prices are expected to be weak.

Nickel Sulfate: On March 27, the SMM battery-grade nickel sulfate index price was 30,656 yuan/mt, a decrease of 55 yuan/mt from the previous working day. The price of battery-grade nickel sulfate ranged from 30,500 to 31,000 yuan/mt, with an average price unchanged from the previous working day. Inquiry activity remained relatively high this week, with downstream actively procuring raw materials for early April. Although the prices of raw materials remain stable, the profit of nickel sulfate products has been restored, and the upward driving force of nickel sulfate prices from the cost side has weakened. Influenced by the downward fluctuation of nickel prices, downstream sentiment towards high-priced nickel sulfate is increasingly cautious, but the tension between supply and demand has not completely eased for the time being, putting pressure on nickel sulfate prices.

Stainless Steel: On March 27, the closing price of the SS contract 2405 contract was 14,450 yuan/mt, continuing to decline since March 19. The lowest point of the SS contract intraday fell to 13,280 yuan/mt, and the contract rebounded in the afternoon, with an increase of 0.45%. Today's trading volume was 256,138 lots, an increase of 65,527 lots from the previous trading day, and the open interest was 169,192 lots, a decrease of 10,486 lots from the previous trading day. The total trading volume of the top five institutions was 292,638 lots, an increase of 73,107 lots; the total long position of the top five institutions was 40,232 lots, a decrease of 3,087 lots; the total short position of the top five institutions was 58,016 lots, a decrease of 5,080 lots. Stainless steel continued to decline to the bottom, with strengthened bullish forces. The overall macroeconomic outlook for May is still good, and the probability of steel mill production cuts in April is high. Under the expectation of improved supply and demand pattern, the SS contract still has some rebound space. In the short term, both long and short parties are active in trading, with newly entered longs actively increasing positions and short covering, but the far month is still dominated by short forces. It is expected to continue to fluctuate.