[SMM Refined Nickel Weekly Review] Indonesia's Policy Direction and Domestic Q1 Demand Have Become the Current Core Focus

During the week, nickel prices fluctuated, with spot prices ranging from 123,000 to 130,000 yuan/mt and SHFE nickel prices ranging from 122,000 to 129,000 yuan/mt. During the week, nickel prices initially rose and then declined, influenced by increased downstream willingness for low-price stockpiling and macroeconomic stimuli, leading to a price correction. However, the overall downstream demand from stainless steel, batteries, and alloys did not show fundamental improvement, making it difficult to support the upward logic for nickel prices. From the perspective of various segments of the nickel industry chain: Nickel ore: This week, Philippine nickel ore and Indonesian domestic trade ore remained relatively stable. Most mines in the Philippines were on holiday shutdown, while uncertainty surrounding Indonesian policies was once again speculated, leading to a wait-and-see sentiment in the nickel ore market. Nickel sulphate: Nickel salt prices rose slightly this week, but market transactions were relatively subdued. NPI: Downstream stainless steel demand showed some improvement, and high-grade NPI prices remained stable. Refined nickel: In December, as the year-end approaches, domestic demand continues to experience an off-season. Coupled with a significant narrowing of export profit margins, domestic refined nickel producers showed reduced production enthusiasm. However, this is unlikely to change the subsequent surplus pattern. Meanwhile, high domestic and overseas inventories exert significant pressure on nickel prices. Macro: In December, after the conclusion of two major domestic meetings and the clarification of policy directions, the market entered a short-term policy vacuum period. Indonesia: The Indonesian Ministry of Energy and Mineral Resources commented on a large-scale reduction in nickel quotas but did not confirm the claim that next year's nickel ore production quota would be reduced to 1.5 billion wmt. It only mentioned that mines must first pass RKAB reviews, leading to a widespread wait-and-see sentiment in the industry. Spot market: From Monday to Wednesday, as nickel prices rose and last week's downstream low-price stockpiling ended, spot market transactions cooled, and premiums for domestically produced refined nickel remained stable at high levels. Starting Thursday, as the tight supply of Jinchuan-brand refined nickel in the domestic spot market significantly eased, premiums for domestically produced refined nickel began to decline rapidly. It is expected that premiums for domestically produced refined nickel are unlikely to return to high levels before the year-end. Inventory: During the week, SMM's six-location inventory totaled 41,229 mt, with a WoW destocking of 872 mt. In the first three days of the week, domestic refined nickel plate spot supply remained relatively tight, and domestic inventory saw slight destocking to supplement spot supply. However, looking ahead, as the supply contraction of domestically produced refined nickel significantly eases, it is unlikely that substantial destocking will occur domestically. In summary, the market this week was characterized by a stable and cautious sentiment across both upstream and downstream sectors. The bearish fundamentals remain the biggest resistance to nickel price increases. Meanwhile, the policy direction in Indonesia and whether domestic demand will improve in Q1 due to concentrated stockpiling have become the core focus. It is expected that next week's spot nickel prices will range from 122,000 to 129,000 yuan/mt, and futures prices will range from 120,000 to 126,000 yuan.