SMM Nickel Market Morning Comment (Apr 15)

Nickel prices surged last week, reaching 142,000 yuan/mt. Despite a slight dip on last Thursday due to macro factors, nickel prices closed on last Friday with a 3.6% increase WoW. Last Wednesday night, the Federal Reserve released the March CPI. It raised up by 3.5% YoY, with the growth being 0.3 percentage point higher than in February. It went beyond what the market expected and was the biggest jump in six months. It went up by 0.4% MoM, the same as February. Surprise high inflation data shook market confidence for a June rate cut by the Fed. This led to a hit on the non-ferrous sector, especially nickel, which fell hard because of its weak fundamentals. Fundamentally, refined nickel production is going strong despite a few smelters taking a break in March. National output keeps climbing because nickel prices were high in March and new production capacity has been steadily coming online since the start of the year. It looks like companies that cut back before are gearing up to ramp up production again, which will boost nickel plate supply even more. Demand side, downstream sectors may have entered a phase of essential purchasing, with a slight decrease. This suggests that some plants began to accept high-priced raw materials, especially special alloy steels. In summary, nickel prices are driven by overall market sentiments. Though they dipped last week after US CPI data disappointed, the anticipation of non-ferrous metals going up hints that SHFE nickel will probably stay strong this week.