[SMM Nickel Midday Review] On June 6, nickel prices continued their fluctuating trend, with the central bank conducting RMB 1,000 billion in outright reverse repo operations.

SMM Nickel News on June 6:

Macro News:

(1) On the evening of June 5, Chinese President Xi Jinping had a scheduled phone call with US President Donald Trump. Xi Jinping pointed out that to steer the course of China-US relations in the right direction, it is crucial for us to keep a firm hand on the tiller and set a clear course, especially by eliminating various distractions and even disruptions. At the US's suggestion, the economic and trade leaders of the two countries held talks in Geneva, marking an important step forward in resolving economic and trade issues through dialogue and consultation. This move has been widely welcomed by all sectors in both countries and the international community, proving that dialogue and cooperation are the only correct choices. Both sides should make good use of the established economic and trade consultation mechanism, uphold an equal attitude, respect each other's concerns, and strive for a win-win outcome. In this regard, China is sincere and also has its principles.

(2) The People's Bank of China (PBOC) announced on June 5 that to maintain ample liquidity in the banking system, it would conduct a 1,000 billion yuan ($137.7 billion) outright reverse repo operation on June 6 through fixed-quantity, interest-rate tendering, and multiple-price bidding, with a term of three months (91 days). This time, the central bank broke with the convention of announcing the outright reverse repo operation at the end of the month and announced it at the beginning of the month instead. Industry experts said that the central bank is strengthening the regulation of market liquidity through various monetary policy tools and implementing a moderately loose monetary policy.

Spot Market:

Today, the SMM 1# refined nickel price is 122,050-124,750 yuan/mt, with an average price of 123,400 yuan/mt, up 300 yuan/mt from the previous trading day. The mainstream spot premiums quotation range for Jinchuan #1 refined nickel is 2,300-2,600 yuan/mt, with an average premium of 2,450 yuan/mt, unchanged from the previous trading day. The spot premiums and discounts quotation range for electrodeposited nickel from mainstream domestic brands is -50-300 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (NI2507) continued its fluctuating trend from yesterday, with no significant fluctuations in the futures market. As of 11:30, the closing price was 121,860 yuan/mt, up 0.12%.

In the medium and long term, the global nickel overcapacity issue remains unresolved, and the nickel market is under triple pressure of "high supply, weak demand, and tight funding." In the short term, the bottom of the fluctuation range is seen at 118,000 yuan/mt, while the top is under pressure at 123,000 yuan/mt.