[SMM Analysis] Weekly Review of Refined Nickel

During the week, nickel prices fluctuated, with spot prices ranging from 122,000 to 131,000 yuan/mt and SHFE nickel prices ranging from 121,000 to 129,000 yuan/mt. Throughout the week, nickel prices continued to decline under the combined influence of the US Fed's economic policies and a drop in nickel ore transaction premiums. From various segments of the nickel industry chain: - Nickel ore: Domestic trade prices of Indonesian laterite nickel ore (HPM) declined again. - Nickel sulphate: Nickel salt prices rose slightly this week, with market circulation remaining at relatively low levels. - NPI: Weak downstream stainless steel demand exerted pressure on high-grade NPI prices. - Refined nickel: Domestically, the trend of increased electrodeposited nickel production persists. Meanwhile, December, as a traditional off-season for plate sales, saw relatively weak downstream demand. Additionally, high domestic and overseas inventories placed significant pressure on nickel prices. Macro perspective: With the conclusion of two major domestic meetings in December and the clarification of policy directions, the market entered a short-term policy vacuum period. Although the US Fed's interest rate cut this month met expectations, the sentiment had already been priced in. Furthermore, the Fed's stance of "slowing the pace of future rate cuts" exacerbated the already negative market sentiment. Overall, bearish fundamentals remain the biggest resistance to nickel price increases. Spot market: This week, the continued decline in nickel prices, coupled with a slight tightening of domestic spot supply, led to rising spot premiums for some domestic brands of refined nickel. If nickel prices continue to fall, spot premiums may remain stable at high levels in the short term. Inventory: During the week, SMM's six-site inventory totaled 42,101 mt, with a WoW destocking of 236 mt. Domestic refined nickel plate spot supply tightened slightly, and domestic inventory saw a small destocking to supplement spot supply. However, it is understood that some domestically exported refined nickel plates will be re-imported next week, and combined with shrinking export profit margins, domestic inventory may further accumulate. In summary, the weakening macro environment this week and the continued downward expectations for Indonesian nickel ore prices may lead to further declines in nickel prices as costs decrease. It is expected that next week's spot nickel prices will range from 120,000 to 128,000 yuan/mt, while futures prices will range from 120,000 to 124,000 yuan.