[SMM Analysis] Nickel Prices Fell First and Then Rebounded This Week, While China’s Inventory Edged Up

This week, nickel prices first fell and then rose, moving sideways amid a tug-of-war between macro fluctuations and supply-side policy. Early in the week, affected by a stronger US dollar and risk-off sentiment across global commodities, LME nickel once fell below the key $17,000 level. It then rebounded on easing tensions in the Middle East and policy expectations that Indonesia planned to impose a nickel export tax. As of Friday's close, the weekly price of the most-traded SHFE nickel contract rose 3%, while the LME nickel 3M contract gained 2.4% WoW. In the spot market, the average SMM price of #1 refined nickel was 138,030 yuan/mt this week, up 1,100 yuan/mt WoW. The average Jinchuan nickel premium was 5,900 yuan/mt this week, down 1,600 yuan/mt WoW. Premiums for mainstream electrodeposited nickel brands in China ranged from -600-400 yuan/mt. Nickel plate premiums fell notably this week, and sluggish demand led to poor trading in the spot market.

On the macro front, geopolitical risks continued to weigh on market risk appetite this week. According to US media reports, the US Department of Defense was formulating a "decisive lethal strike" military plan against Iran, which could include the deployment of ground forces and large-scale airstrikes. Although news of a ceasefire window had emerged earlier, risk-off sentiment did not truly fade. China's macro policy maintained a positive tone, and the pro-growth signals released at the Boao Forum boosted market confidence.

Inventory side, Shanghai Bonded Zone inventory was about 1,700 mt this week, with destocking of 500 mt WoW. China's social inventory was about 90,000 mt, with an inventory buildup of about 1,300 mt WoW.

Nickel prices are expected to remain in a tug-of-war between "strong cost support" and "weak actual demand" in the short term. The core trading range of the most-traded SHFE nickel contract is expected at 133,000-143,000 yuan/mt. Cost-floor support provided by Indonesian policy remains solid, but macro pressure and weak demand will limit upside room.