[SMM Nickel Midday Review] On May 26, nickel prices continued to fluctuate rangebound, with the US planning to impose a direct 50% tariff on the EU

SMM Nickel News on May 23:

Macro News:

(1) Trump has reopened a 90-day window for trade negotiations with the EU, after von der Leyen took the initiative to contact him. Previously, Trump had stated that discussions with the EU had made no progress and suggested imposing a 50% tariff on the EU starting from June 1. The European Commission refused to comment on US trade tariffs until the EU Trade Commissioner had a phone call with the US Trade Representative. US Treasury Secretary Bessent claimed that the 50% tariff threat was a response to the EU's pace of action, hoping it would incentivize the EU to take action.

(2) Fed's Goolsbee: A 50% tariff on the EU is an order of magnitude different from the current situation, and such a high tariff level would severely impact the supply chain. In the short term, the Fed needs to wait for the situation to clarify, and the threshold for action is high before that. There is still a possibility of an interest rate cut within the next 10-16 months.

Spot Market:

Today, the SMM 1# refined nickel price is 122,950-125,350 yuan/mt, with an average price of 124,150 yuan/mt, a decrease of 25 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan #1 refined nickel is 2,100-2,300 yuan/mt, with an average premium of 2,200 yuan/mt, an increase of 50 yuan/mt from the previous trading day. The premiums and discounts quotation range for Russian nickel is 100-400 yuan/mt, with an average premium of 250 yuan/mt, unchanged from the previous trading day.

Futures Market:

The most-traded SHFE nickel contract (NI2506) continues to exhibit a fluctuating trend within a narrow range. As of 11:30, the closing price is 122,960 yuan/mt, up 0.07%. In terms of inventory, as of May 23, LME nickel inventory decreased by 2,274 mt to 198,636 mt on a single day, and SMM refined nickel social inventory across six locations decreased by 1,762 mt WoW to 42,389 mt, both showing destocking.

In the short term, nickel prices are subject to a dual tug-of-war between cost support and supply-demand surplus, and are expected to remain in the doldrums within the 121,000-127,000 yuan/mt range. On the macro side, attention should still be paid to the impact of uncertainties in Trump's tariff policy on the market. The marginal effect of the China-US tariff reduction agreement has weakened, and the US's threat to impose a 50% tariff on the EU will trigger market risk-averse sentiment.