SMM Morning Comment For Nickel Market On November 20

SHANGHAI, November 20 (SMM) –On the macro front, on the evening of November 14, the consumer price index, reported by the Bureau of Labor Statistics, climbed 3.2% year over year in October, showing a slowdown compared to September's 3.7% and falling below market expectations. At the same time, the more closely watched October's core CPI index on a seasonally adjusted basis rose 4% on a year-over-year basis, the smallest 12-month change since September 2021. The unexpected cooling of inflation data further fueled market expectations of four interest rate cuts by the Federal Reserve in 2024. Once the data was released, the non-ferrous metal sector collectively rose that evening, with SHFE nickel gaining about 0.74% on the same day. However, by last Thursday's closing, nickel prices retraced the previous day's gains. Nickel prices continued to fluctuate at a low level on last Thursday, mainly due to the persistently weak fundamentals of SHFE nickel, resulting in insufficient upward momentum. From a fundamental perspective, the Shanghai nickel spot market had sluggish transactions last week. According to SMM research, some traders reported minimal spot transactions last week. Additionally, a small amount of imported nickel plates entered the market on last Thursday and Friday, increasing domestic spot supply. From the demand perspective, the alloy industry has entered the traditional off-season, resulting in a moderate decline in the demand for pure nickel. However, the reduction in nickel plate consumption is better than expected. Additionally, with the support of military orders, the overall support of the alloy industry for nickel prices remains crucial. Moving on to stainless steel, it is affected by a decline in orders, leading to the anticipated production reduction in the 300-series stainless steel as planned, resulting in a certain decrease in nickel plate consumption. Currently, attention should be focused on the price difference between nickel briquette and nickel sulphate. Although nickel briquette prices remain below those of nickel sulphate, they have not yet reached a level conducive to profitable nickel sulphate production. It is noteworthy that nickel sulphate prices are influenced by reduced downstream demand, compounded by the continuous decline in SHFE nickel prices affecting raw material costs. With diminishing cost support and a weakening demand side, future nickel sulphate prices may continue to decline, narrowing the gap between nickel briquette and nickel sulphate prices. In summary, the current macro sentiment remains positive, but there is no significant bullish catalyst driving nickel prices upward. Fundamentally, the market continues to experience a mismatch between supply and demand, with a sustained increase in the oversupply of pure nickel.