[SMM Nickel Midday Review] On May 7, refined nickel prices continued to rise slightly, with the PBOC implementing both RRR cuts and interest rate cuts.

SMM Nickel News on May 6:

Macro News:

Key highlights from the May 7 press conference of the "one bank, one bureau, and one association" - "Dual measures" of RRR cuts and interest rate cuts

(1) Quantitative policy measures by the PBOC - Increasing medium and long-term liquidity supply: ① Reducing the reserve requirement ratio (RRR) by 0.5 percentage points, bringing the overall average RRR from 6.6% to 6.2%, and expected to provide approximately 1 trillion yuan of long-term liquidity to the market. ② Improving the RRR system by temporarily reducing the RRR for auto finance companies and financial leasing companies from the current 5% to 0%.

(2) Pricing policy measures - Adjusting structural monetary policy tools and housing provident fund loan interest rates: ① Lowering the policy interest rate by 0.1 percentage points, with the 7-day reverse repo operation rate in the open market reduced from 1.5% to 1.4%, expected to drive a synchronous decline of approximately 0.1 percentage points in the loan prime rate (LPR). ② Reducing the interest rates of structural monetary policy tools by 0.25 percentage points, including various special structural tools and re-lending rates for agriculture and small businesses, all lowered from the current 1.75% to 1.5%; the interest rate for pledged supplementary lending (PSL) reduced from the current 2.25% to 2%. ③ Lowering the interest rate for individual housing provident fund loans by 0.25 percentage points, with the interest rate for first-time home purchases with a term of over five years reduced from 2.85% to 2.6%, and interest rates for other terms adjusted accordingly.

Spot Market:

Today, the SMM 1# refined nickel price ranges from 124,300 to 127,000 yuan/mt, with an average price of 125,650 yuan/mt, up 75 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan No.1 nickel is 2,000-2,300 yuan/mt, with an average premium of 2,150 yuan/mt, down 100 yuan/mt from the previous trading day. The premiums and discounts quotation range for Russian nickel is -50 to 300 yuan/mt, with an average premium of 125 yuan/mt, up 25 yuan/mt from the previous trading day.

Futures Market:

The most-traded SHFE nickel contract (NI2506) mainly fluctuated rangebound in the morning session, closing at 124,690 yuan/mt at 11:30, up approximately 0.1% from the settlement price of the previous trading day. In terms of inventory, LME nickel inventory stood at 200,082 mt as of May 6, continuing to destock by 336 mt, with overall inventory remaining at a high level. SMM's domestic social inventory was approximately 44,100 mt, destocking by about 560 mt MoM.

Currently, bullish and bearish factors are intertwined in the nickel market, with nickel prices fluctuating rangebound. The upward pressure comes from weak downstream demand, high inventory pressure, and macroeconomic uncertainties, while the downward support relies on the cost line. Meanwhile, refined nickel raw materials are in short supply, which will affect supply in the short term.