[SMM Analysis] Nickel prices rose sharply due to macro boost, while spot market transactions remained flat

This week, the nickel market exhibited a notable divergence between macro expectations and fundamental conditions. Domestic "anti-rat race" policy initiatives provided a brief boost to market sentiment. The most-traded SHFE nickel contract opened at 120,330 yuan/mt at the beginning of the week and closed at 124,360 yuan/mt on Friday, registering a weekly increase of 3.35%. LME nickel was last quoted at $15,520/mt, with a weekly gain of 1.80%. In the spot market, the average price of SMM 1# refined nickel was reported at 123,960 yuan/mt, up 2,720 yuan/mt WoW. The premium for Jinchuan nickel remained steady at 1,900-2,100 yuan/mt, while the premium range for mainstream electrodeposited nickel in China stayed at -100-300 yuan/mt this week, unchanged from the previous week. However, spot market transactions were sluggish, with downstream participants adopting a wait-and-see attitude.

Macro perspective, the domestic "anti-rat race" policy continued to gain momentum, with frequent news of production cuts stimulating a rotation rally in the industrial products sector. Nickel prices briefly followed the upward trend. On July 25, the People's Bank of China conducted a 400 billion yuan Medium-term Lending Facility (MLF) operation with a one-year maturity, marking the fifth consecutive month of increased MLF operations. Meanwhile, the third round of China-US trade negotiations is scheduled to take place in Stockholm, Sweden, next Monday and Tuesday, following two previous rounds of talks in Geneva and London. August 12 is the deadline for the suspension of tariff hikes between China and the US, and the latest round of negotiations aims to extend this deadline.

In terms of inventory, the Shanghai Bonded Zone inventory was approximately 4,700 mt this week, with a destocking of about 300 mt WoW.

Domestic social inventory was around 40,300 mt, with a destocking of 57 mt WoW.