Supply Changes and Macro Uncertainty Suppress Nickel Prices; High-Grade NPI Prices Remain Firm but Risk Decline [SMM Analysis]

Recently, the nickel market has experienced significant fluctuations, with nickel prices showing noticeable intraday volatility and decline. Market attention has increased on the price trends of high-grade NPI and refined nickel, especially as the discount between high-grade NPI and refined nickel continues to narrow. Since last week, nickel prices have fallen significantly. Today, SHFE nickel once fell below 126,000 yuan/mt, while LME nickel rebounded slightly after hitting a low of $16,300/mt and is currently fluctuating between $16,300/mt and $16,500/mt.

The decline in nickel prices is mainly influenced by changes in international market supply, particularly news from Indonesia that more new projects have been approved by RKAB, raising concerns about increased ore supply. Additionally, with the upcoming US election, the political movements of the Harris and Trump camps have added uncertainty to the US macroeconomic environment, further stimulating risk-averse sentiment and increasing downward pressure on the market. Overall, these factors have put current nickel prices under pressure, and a short-term rebound is unlikely.

In the high-grade NPI market, the situation is different. The positive performance of the stainless steel market after the holiday has supported raw material prices, keeping high-grade NPI prices relatively stable. Facing long-term losses, the upstream market maintains a strong sentiment to stand firm on quotes. Additionally, the high production schedule of 300-series stainless steel continues, especially with a large stainless steel mill in South China planning to increase new capacity in November, making high-grade NPI procurement demand more active and pushing up spot market prices.

However, this week, the fundamentals of the stainless steel market have weakened. Due to the domestic fiscal and monetary policies not meeting expectations, market transactions have become sluggish, and spot prices have gradually declined, expanding the losses of steel mills. In this context, the market's negative feedback effect has begun to show, and high-grade NPI procurement prices have retreated from high levels. In the short term, high-grade NPI prices may decline, but as the discount continues to narrow amid fluctuations, the decline is expected to be smaller than the overall adjustment in nickel prices.

In summary, market participants need to closely monitor policy changes and the potential impact of global market supply and demand dynamics.