Refined Nickel Futures Rebound in the First Week After the Holiday, with Limited Market Transactions [SMM Analysis]

Refined Nickel Futures Rebounded in the First Week After the Holiday, With Limited Market Transactions

This week, nickel prices fluctuated upward, with spot prices ranging between 123,200-130,100 yuan/mt, while SHFE nickel futures prices ranged between 122,650-127,650 yuan/mt.

On the news side, Indonesia's Minister of Energy and Mineral Resources recently projected that nickel ore production in 2025 will reach 220 million mt, lower than the RKAB approval volume of 298.49 million mt announced by the Secretary General of the Indonesian Nickel Miners Association at the end of January. Uncertainty remains in Indonesia's nickel ore supply. However, after the announcement of the Philippines' "mining ban" this week, futures prices rose for two consecutive days.
Fundamentals side, supply side, during the Chinese New Year holiday, small nickel producers in various regions suspended production for the holiday, while most medium and large refined nickel producers maintained normal operations. Domestic refined nickel production in February is expected to decline MoM, but overall supply remains sufficient. Demand side, downstream production gradually resumed after the holiday, but market transactions remained limited this week.

Regarding spot premiums/discounts, as of this Friday, February 7, Jinchuan brand premiums/discounts ranged between 2,200-2,600 yuan/mt, with an average price of 2,400 yuan/mt. With weak market transactions, premiums/discounts are expected to remain in a narrow range at low levels next week.

Overall, nickel still faces an oversupply situation in the short term, but uncertainties in nickel ore supply and smelters' losses on production provided support for prices. Combined with the impact of news, nickel prices rebounded this week, although they remain within a fluctuating range. In the short term, attention should still be paid to macroeconomic trends and inventory changes, and nickel prices are expected to fluctuate upward at low levels.

In summary, fundamentals show no significant short-term improvement. With supply exceeding demand, nickel prices are expected to continue wide fluctuations in the short term. Post-holiday spot nickel prices are projected to range between 122,900-130,500 yuan/mt, while futures prices are expected to range between 123,100-128,000 yuan/mt.

No Change in Bonded Zone Inventory This Week

According to the latest survey data from SMM, nickel inventory in the bonded zone this week stood at 5,400 mt, unchanged WoW.

Inventory:
This week, SMM's six-location inventory totaled 44,691 mt, up 3,418 mt WoW. Nickel prices rose during the week. In the first week after the holiday, overall downstream transactions were sluggish. Domestic spot premiums/discounts fluctuated slightly at low levels.