SMM Nickel Market Morning Comment (Jul 22)

Last week, SHFE nickel continued its downward trend, down approximately 3.58% WoW. By Friday, SHFE nickel closed at 130,170 yuan/mt. Last week, nickel prices recorded a larger decline affected by both fundamentals and macro factors. On the macro side, global attention was focused on the assassination attempt on Trump, which had a direct impact on the upcoming US election. After being shot, Trump might gain some sympathy and support from voters, potentially boosting his election prospects. According to previous reports, Trump announced during his campaign that if re-elected in the November election, he would significantly increase tariffs on Chinese goods, possibly imposing tariffs exceeding 60%, and plan to gradually reduce imports from China to zero deficit within four years. This would undoubtedly pose a significant challenge to China's manufacturing industry. Amid economic turmoil, risk-averse funds might choose to stay away from the non-ferrous metals market, which is closely related to manufacturing. Fundamentals side, the Philippines is currently experiencing slow shipments due to weather. Indonesia announced on Thursday that nickel and tin will be integrated into the local SIMBARA system. This system aims to provide comprehensive and transparent traceability of the nickel supply. Through this system, Indonesia can track nickel sales in real-time, including mining locations, processing, transportation, and export information, which will help ensure that producers comply with global standards and reduce illegal mining, child labor, and environmental damage. The data integration of the system will also improve government oversight efficiency. The specific impact on nickel supply still awaits further clarification from Indonesian authorities. In the domestic spot market, nickel prices saw a significant drop last week, leading to a rebound in downstream purchasing sentiment, with social inventories decreasing again during the week and market transactions heating up. However, it should be noted that this is merely due to restocking driven by rigid demand after conservative purchases amid previously high nickel prices, not a genuine recovery in end-user demand. Therefore, after nickel prices entered a downward channel, end-user demand did not show a significant increase. Future spot market transactions may see a shift. In summary, current macro sentiment exerts downward pressure on nickel prices. Although there were disruptions on the supply side, the specific impact has yet to materialize, and downstream demand significantly shrunk. Nickel prices are expected to fluctuate downward this week.