SMM Morning Comment For Nickel Market On January 2

Nickel prices experienced an expanded decline last week, reaching a low of 125,210 yuan/mt on last Friday, with a daily drop of 3.88%. The price difference between nickel sulphate and nickel plates averaged 9,630 yuan/mt last week, showing a 6% decrease compared to the previous week. On the one hand, nickel sulphate prices are stabilizing because of low market transactions due to weak supply and demand. On the other hand, the fundamental impact on nickel prices led to a noticeable decline compared to the previous week, ultimately narrowing the price difference between the two. Last week, the U.S. Department of Labor announced that the initial jobless claims in the week ending December 23 were at 218,000, up from the previous 206,000. Market expectations were around 210,000. Initial jobless claims refers to the number of workers applying for unemployment benefits for the first time following job loss, and are widely used as an indicator of labor market conditions. The easing of the Red Sea situation is slower than expected, still disrupting global shipping. Only a few participants are involved in the "Red Sea Escort Alliance." Overall, from a macro perspective, it still has a positive impact on commodity prices. In terms of fundamentals, the significant increase in LME inventories is the main pressure on nickel prices last week. Refined nickel inventories have accumulated by 17,718 mt since December, and LME inventories have officially surpassed 60,000 mt last week, reaching a total of 64,056 mt. Notable inventory accumulation is primarily concentrated in warehouses in Rotterdam, Singapore, and Busan. The increased inventories in Singapore and Busan warehouses, in particular, partly stems from domestically produced electrodeposited nickel. Due to the impact of the holiday season, domestic warehouses experienced a slight reduction in social inventory, leading to a modest decrease in overall stock levels compared to the previous week. From the demand perspective, the stainless steel industry is expected to see an increase in production for 300-series stainless steel due to the expansion plans of some enterprises. This is anticipated to provide some support to the demand for pure nickel. In the alloy sector, it's still considered the off-season with no clear signs of improvement in downstream orders, leading to limited demand for nickel plates. Overall, the current supply-side increment continues to meet incremental expectations, and the trend of accumulating inventories both domestically and internationally persists.