[SMM Nickel Midday Review] Nickel prices continued to weaken on May 23, with the central bank conducting a 500 billion yuan MLF operation

SMM Nickel News on May 23:

Macro News:

(1) US President Donald Trump's signature tax reform bill narrowly passed the House of Representatives on Thursday morning, signaling progress on a massive trillion-dollar plan. The plan will avert tax increases at the end of the year, but at the cost of a heavier US debt burden. The bill is now being considered by the Senate, where some Republican lawmakers are demanding significant changes. Lawmakers plan to vote on it by August at the latest. The bill also includes a provision to raise the US debt ceiling by $4 trillion; otherwise, according to Treasury Department forecasts, the US could face a debt default risk as early as August or September, adding urgency to the bill's passage.

(2) The People's Bank of China (PBOC) announced on the 22nd that, to maintain ample liquidity in the banking system, it will conduct a 500 billion yuan medium-term lending facility (MLF) operation on May 23 with a one-year maturity. This MLF operation continues the fixed-quantity, interest-rate tender, and multiple-price winning bid approach. With 125 billion yuan of MLF maturing this month, this means the net MLF injection reaches 375 billion yuan, marking the third consecutive month of increased MLF operations.

Spot Market:

Today, the SMM 1# refined nickel price is 123,000-125,350 yuan/mt, with an average price of 124,175 yuan/mt, down 325 yuan/mt from the previous trading day. The quotation range for spot premiums of Jinchuan #1 refined nickel is 2,100-2,200 yuan/mt, with an average premium of 2,150 yuan/mt, unchanged from the previous trading day. The quotation range for premiums and discounts of Russian nickel is 100-400 yuan/mt, with an average premium of 250 yuan/mt, up 50 yuan/mt from the previous trading day.

Futures Market:

The most-traded SHFE nickel contract (NI2506) opened lower in the night session and continued to weaken, extending its weakness into the daytime session. As of 11:30, the closing price was 122,660 yuan/mt, down 0.66%.

Nickel prices are currently dominated by "intensified policy disruptions and deepening supply-demand imbalance," maintaining a fluctuating trend in the short term, with a support level at 122,000 yuan/mt and a resistance level at 128,000 yuan/mt. The medium and long-term trend is expected to be weak.