[SMM Analysis] Overall Price Decline, Market Transactions Remain Sluggish

Summary of Nickel Market from February 17 to 21: Prices Declined Overall, Market Trading Remained Weak This week, nickel prices continued to decline. Spot prices fluctuated between 123,200-127,300 yuan/mt, while SHFE nickel futures prices ranged from 123,300 yuan/mt to 126,300 yuan/mt. Despite the ongoing supply shortage in the Indonesian nickel ore market, the benchmark price for domestic trade ore in Indonesia for March remained stable overall and is expected to rise MoM, providing some support for nickel prices. In the Philippines, there has been no news of new policy adjustments, and the sentiment impact caused by previous policies has eased. As of this Friday (February 21), the average price of SMM Indonesian domestic trade laterite nickel ore 1.2% (FOB) increased by $1/wmt to $19/wmt, while the 1.6% (FOB) average price also rose by $1/wmt to $39/wmt, showing an overall upward trend. Fundamentally, on the supply side, most factories resumed operations after the holiday, but overall trading volume remained low. On the demand side, due to the seasonal low and a slower recovery compared to previous years, market purchase willingness was weak. Demand recovery is expected to occur in March. As of February 21, the premium/discount for Jinchuan brand nickel was 1,700-2,200 yuan/mt, with an average of 2,020 yuan/mt. Recently, influenced by domestic and international news, the market is expected to remain sentiment-driven next week, with slight fluctuations in the premium/discount. In summary, this week's nickel price fluctuations were largely driven by sentiment. Moving forward, attention should be paid to nickel ore policies in Indonesia and the Philippines, as their uncertainties provide some support for nickel prices. However, the slower-than-expected recovery in downstream demand and the surplus in nickel inventory will continue to weigh on nickel prices in the short term. It is necessary to monitor the actual recovery of downstream demand and subsequent macroeconomic changes. Spot nickel prices are expected to fluctuate within the range of 123,150-130,000 yuan/mt, while futures prices are projected to range between 123,200-128,000 yuan/mt. Bonded Zone Inventory Remained Flat WoW In terms of inventory, according to the latest SMM survey data, nickel inventory in the bonded zone this week was 5,600 mt, unchanged WoW. Inventory SMM's six-region inventory totaled 47,209 mt, down 2,250 mt WoW. Overall, demand has not improved this week, and recovery is expected to occur in March.