[SMM Nickel Midday Review] On May 16, refined nickel premium remained flat, while refined nickel prices dropped slightly

SMM Nickel News on May 16:

Macro News:

(1) Fed Chairman Powell: The US Fed is adjusting its overall policy-making framework, with zero interest rates no longer being a baseline scenario. There is a need to reconsider the wording regarding underemployment and the average inflation rate. It is expected that the April PCE will drop to 2.2%, which is a mild figure, but it may still not reflect the upcoming tariff-driven price increases. Powell stated that some of the Fed's practices are permanent, such as the focus on inflation expectations. Sound inflation expectations enable the Fed to provide follow-up support for employment deployment without jeopardizing inflation stability.

(2) A report released by the Japanese government on Friday showed that the country's economy contracted for the first time in a year in Q1. The economy contracted by 0.2% QoQ, compared to market expectations of a 0.1% contraction. The actual GDP growth rate for Q1, when annualized, was -0.7%, far below the median market forecast of -0.2%. The revised GDP growth rate for the previous quarter was 2.4%. The decline in Japan's economy was attributed to stagnant private consumption and falling exports. Private consumption, which accounts for more than half of Japan's economic output, remained flat in Q1, while market expectations were for a 0.1% increase. Japanese exports fell by 0.6% in the quarter, while imports rose by 2.9%.

Spot Market:

Today, the SMM 1# refined nickel price is 124,900-127,350 yuan/mt, with an average price of 126,125 yuan/mt, down 200 yuan/mt from the previous trading day. The quotation range for the mainstream spot premiums of Jinchuan No.1 nickel is 2,000-2,200 yuan/mt, with an average premium of 2,100 yuan/mt, unchanged 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, unchanged from the previous trading day.

Futures Market:

The most-traded SHFE nickel contract (NI2506) maintained a fluctuating trend in the morning session, closing at 124,730 yuan/mt as of 11:30, down approximately 0.24%.

Consensus has been reached on tariff issues in the China-US economic and trade talks, easing trade tensions. Currently, nickel ore prices remain high, and there is still a shortage of supply in mining areas, leading to increased costs in the nickel industry chain. However, under the supply surplus situation, cost transmission is hindered, and nickel prices may maintain a weak and fluctuating trend, with a support level at 122,000 yuan/mt and a resistance level at 128,000 yuan/mt. Subsequent attention should be paid to policy adjustments in Indonesia and changes in nickel ore supply after the end of the rainy season in the Philippines.