SHFE nickel prices bottomed out, despite a notable rise in global pure nickel inventories

Nickel prices bottomed out last week, increasing during the evening session of January 10. They rose by about 3.24% last week, reaching 129,420 yuan/mt at the close on January 12. The price difference between nickel sulphate and pure nickel expanded, mainly influenced by the rise in nickel prices and relatively small fluctuations in nickel sulphate spot prices. On the macro front, on the evening of January 11, the U.S. announced that the December non-seasonally adjusted CPI rose to 3.4%, up from the previous 3.1%. The non-seasonally adjusted core CPI went down from 4% to 3.9%. The expectation of further inflation pressure led to a strengthening of the U.S. dollar that night. The Fed is keeping a close eye on the year-on-year core inflation, which has slightly decreased from the previous 4% to 3.9%. This has led to a cooling off in gold prices, benefiting commodity prices, and causing nickel futures prices to trend upward. From a fundamental perspective, LME nickel inventory added by 4,212 mt, and China's social inventory rose by 2,524 mt. Globally, apart from China, Europe has the highest cumulative inventory, increasing by about 9% compared to previous week. In Asia, the main increase in warehouse stock is in Singapore. The recent increase in inventory was mainly attributed to nickel briquettes. The main reason for the domestic inventory accumulation is the continuous arrival of nickel plates from other regions to Shanghai, coupled with the downstream demand weakening after rebound in nickel prices. Additionally, as of last Friday, electro-deposited nickel exported to LME remains more profitable than selling it at a discount in the domestic spot market. The electroplating industry is growing steadily because it's receiving more orders in response to increased downstream demand from various industries. As for the alloy sector, research indicates a slight cooling of purchasing sentiment last week, primarily influenced by earlier completion of some procurement for stockpiling. In November, domestic stainless steel production is expected to decrease compared to the previous month, according to SMM research. This is attributed to the industry entering the maintenance period, leading to a further reduction in demand for pure nickel.