SMM Morning Comment For Nickel Market On November 13

SHANGHAI, November 13(SMM) –On the macro front, rising initial jobless claims in the US suggested a slowing labour market, leading the Federal Reserve to hasten monetary easing. Among the recent hawkish speeches by Fed officials, Fed Chair Powell's remarks emphasised a commitment to stringent monetary policy which yet reached its target, indicating potential further tightening. Following his speech, the dollar index shifted, with US bond yields climbing. Amid these macroeconomic tensions, nickel prices fell, reversing gains from the past two days, reflecting the current market's delicate state. The significant fall in SHFE nickel ended the inverse price spread between nickel sulphate and nickel briquettes, achieving theoretical profits for converting nickel briquettes into nickel sulphate in early November. However, limited downstream demand for nickel sulphate and a rebound in SHFE nickel from oversold conditions could further reduce prices, potentially leading to a negative profit margin from nickel briquettes to nickel sulphate. Domestic refined nickel stock has been rising since September, with inventories up 9.26% week-on-week to 14,398 mt as of 10th November, according to SMM. This increase added pressure on domestic refined nickel inventory. Additionally, SMM reported that despite falling nickel prices, domestic refined nickel production in October remained unaffected, with some smelters ramping up to full capacity. Thus, the supply of refined nickel remained robust. On the demand side, weakening downstream demand has led some major steel mills to plan reductions or halts in 300-series stainless steel production, diminishing the demand for refined nickel. Meanwhile, in the alloy sector, which was currently in its off-peak season, domestic orders are weak, though stable military orders were supporting refined nickel consumption. In conclusion, both macroeconomic and fundamental factors are pressuring nickel prices. The sharp price fall, dipping below the production costs of some companies, has influenced prices and profitability across nickel-based products. Consequently, nickel prices are expected to experience fluctuations this week with limited scope for further decline.