Short-Term Nickel Cost Support Remains Strong, but Marginal Weakening Is Expected [Institutional Commentary]

On Monday, nickel prices fluctuated, with the most-traded SHFE nickel contract closing at 1,252,000 yuan/mt, up 0.75% from the previous day. From a macro perspective, US tariff policies are gradually being implemented, and the final outcome and its economic impact remain to be seen. Regarding the US Fed's stance, Powell indicated that interest rate cuts would be considered only after the situation becomes clearer, suggesting that in the absence of significant weakening in US economic "hard data," short-term concerns may lean more towards inflation rather than recession risks.

Supply side, in March 2025, national refined nickel production reached 36,700 mt, setting a new monthly record, and a slight increase is expected in April. Demand side, downstream acceptance of high nickel prices is limited, and spot transactions have noticeably cooled this week as nickel prices strengthened. Cost side, nickel ore prices remained strong this week, and the transaction coefficient for intermediate products continued to fluctuate at highs, providing solid short-term cost support. However, with increased supply from Philippine nickel mines and weaker production schedules for downstream nickel sulphate and stainless steel, ore prices and intermediate product prices are expected to ease.

Overall, the macro perspective still faces significant uncertainties, and while short-term cost support is strong, there is an expectation of marginal weakening. We recommend considering short positions at higher levels. This week, the price range for the most-traded SHFE nickel contract is expected to be 120,000-130,000 yuan/mt, and the LME nickel 3M contract is expected to range from 15,000-16,300 $/mt.