Affected by the capital side, SHFE nickel reversed its weakness and rose by nearly 3.5%, spot prices rebounded for four consecutive days [SMM Comment]

Today, base metals generally rose, with SHFE nickel leading the gains, mainly influenced by the capital side. Currently, fundamentals show weak demand and relatively loose supply expectations, providing no upward momentum for nickel prices. By daytime close, SHFE nickel rose by 3.49%, and by 15:03, LME nickel increased by 1.98%.

Spot Market

Today, SMM #1 refined nickel spot price averaged 132,250 yuan/mt, up 3.00% from the previous day, marking four consecutive days of gains. Yesterday, an SMM survey showed that spot premiums were significantly lowered as the contract that quotations are based on changed.

Fundamentals

Supply:

SMM expects refined nickel production in July to continue increasing MoM. The survey showed that nickel prices exhibited some resilience in July, with the production of nickel producers qualified for exports continuously increasing. The newly commissioned nickel plate capacity at the beginning of the year is still in the production ramp-up stage.

Inventory:

Last week (July 26), domestic refined nickel social inventory continued destocking across regions, down more than 500 mt from the previous week. During the week, as the market fluctuated downward, downstream restocking sentiment continued. Overall, the spot market trading atmosphere was relatively warm during the week, and the slight drop in domestic inventory aligned with the fundamentals.

LME nickel inventory recently continued its increasing trend, with inventory on July 30 up more than 700 mt from the previous day, mainly concentrated in Singapore and Kaohsiung warehouses.

Demand:

According to an SMM survey, current downstream nickel procurement is mainly based on rigid demand, with end-user demand yet to recover. Therefore, overall demand remains poor.

SMM Outlook

Overall, the supply-demand mismatch in fundamentals still exists. Domestic refined nickel production is expected to increase while downstream demand remains weak. Refined nickel inventory has continued to decrease recently. SMM believes that in the short term, nickel prices may still run weak, with destocking somewhat limiting the decline. For future price trends, attention should be paid to macro news and demand conditions.