[SMM Nickel Morning Meeting Minutes] Macro Fundamentals Are Mixed, Nickel Prices Are Expected To Run Shockingly

Macro, last week focus on the evening of July 12, the U.S. Department of Labor announced the June non-quarterly CPI annual rate of 4% from June fell to 3%, and lower than the market forecast of 3.1%. CPI exceeded the expected decline in the market led to the Fed close to the end of the interest rate hike cycle of the expectations have been strengthened.

Fundamentally, on the supply side, as the monthly difference between the SHFE 07 and 08 contracts continued to hold without narrowing, some traders chose to take positions directly in the 07 contract, resulting in tight Russian nickel spot during the week.

Bonded zone inventory also slightly de-stocked during the week, 500 tonnes from the previous year.

Demand side, the current downstream alloy and stainless steel demand has picked up, but electroplating and battery demand is expected to continue to decline in July without improvement.

In summary, the current market mixed emotions, macro-emotions have not been fully released, the basic support for nickel prices is limited, is expected to follow the nickel price or will show a trend of oscillation.

Pure nickel: the current Shanghai nickel by the macro impact is obvious, so you need to pay extra attention to the follow-up macro news.

The current market point of conflict is whether the Fed continues to raise interest rates in September, before the release of the data, the Fed maintained interest rates show that the probability of maintaining the July rate in September is 6.1%, after the release of the data, the probability of raising to 8.9%.

In the short term, it is still necessary to pay attention to the United States to July 20 (next Thursday) published the number of initial jobless claims (10,000 people) in the week of July 15.

Fundamentally, due to the early SHFE 07 and 08 contract spread maintained at about 3,000 yuan, while the spot market 08 contract Russian nickel premium offer in the vicinity of 2,400 yuan, affected by the profits of some traders choose to directly in the 07 contract positions, resulting in a tight Russian nickel spot during the week, the Russian nickel premium rise instead of fall.

Expected next week, Russian nickel tight supply situation or will ease, mainly due to the next Monday for Shanghai nickel 07 contract delivery day, delivery will be part of the end of the warehouse receipts back into the market.

In addition, the current supply of pure nickel production is still in the climbing stage, the overall refined nickel production continued to rise in July, is expected to increase by 4.27% year-on-year.

Demand side, 300 series stainless steel in July there is a slight increase in production, mainly due to downstream orders have some warming. Alloy side, in July, some alloy factory said orders have some growth, the demand for raw materials has increased. But the plating side in the beginning of next week due to the impact of hot weather, coupled with poor downstream orders, part of the plating plant will choose to shut down and reduce production.

In summary, the current macro and fundamental intertwined, nickel prices are expected to show a shock trend.

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