[SMM Nickel Midday Review] On May 8, refined nickel prices fell, with the US Fed keeping interest rates unchanged

SMM Nickel News on May 6:

Macro News:

(1) In their policy statement for May, US Fed officials stated that GDP growth turned negative in Q1. However, even so, the Fed's policy committee still believes that the underlying economy remains strong. They observed that the volatile trade statistics were the main reason for the contraction in GDP in Q1, as imports surged ahead of new tariffs. "Despite the fluctuations in net exports affecting the data, recent indicators suggest that economic activity continues to expand at a solid pace," the statement read. However, in the new language of this month's policy statement, officials also acknowledged that "the risks of higher unemployment and inflation have intensified."

(2) The US Fed kept interest rates unchanged for the third consecutive meeting, emphasizing that they believe the risks of both rising inflation and unemployment are increasing. The FOMC committee stated, "The uncertainty surrounding the economic outlook has increased further. The Committee is monitoring the risks to its dual mandate in both directions and judges that the risks of both high unemployment and high inflation have risen." Officials unanimously voted to keep interest rates within the range of 4.25%-4.5%. The Fed stated that it would continue to reduce its balance sheet at the pace announced at the March meeting. Trump's trade policies have sparked a wave of uncertainty throughout the economy. While tariffs are still under negotiation, economists generally expect that comprehensive tariffs will push up inflation and drag down economic growth. This will create an imbalance between the two objectives of policymakers (price stability and maximum employment).

Spot Market:

Today, the SMM 1# refined nickel price is 123,500-126,300 yuan/mt, with an average price of 124,900 yuan/mt, a decrease of 750 yuan/mt from the previous trading day. The quotation range for the mainstream spot premiums of Jinchuan No.1 nickel is 2,100-2,400 yuan/mt, with an average premium of 2,250 yuan/mt, an increase of 100 yuan/mt from the previous trading day. The quotation range for premiums and discounts of Russian nickel is 0-300 yuan/mt, with an average premium of 150 yuan/mt, an increase of 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 124,330 yuan/mt as of 11:30, up approximately 0.2% from the settlement price of the previous trading day. In terms of inventory, LME nickel inventory was 200,082 mt as of May 6, continuing to destock by 336 mt, with overall inventory still at a high level. SMM 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, there is a shortage of refined nickel raw materials, which will have an impact on supply in the short term.