[SMM Analysis]Nickel prices rose sharply due to macro support, while transactions in the spot market were sluggish

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This week, the nickel market exhibited a notable feature of "divergence between macro expectations and fundamentals." Domestic policies aimed at combating "rat race" competition provided a temporary 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, marking 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, with a weekly increase of 2,720 yuan/mt. The premium for Jinchuan nickel remained stable 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 last week. However, trading activity in the spot market was sluggish, with downstream participants mostly adopting a wait-and-see attitude. From a macro perspective, domestic policies aimed at combating "rat race" competition continued to gain momentum, with frequent news of production cuts stimulating a rotation in the industrial products sector and a temporary rise in nickel prices. 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's 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.