[SMM Analysis] In July, the spot price of refined nickel increased, with supply increasing slightly

In July 2025, the average spot price of SMM #1 refined nickel was 122,237 yuan/mt, up 680 yuan/mt MoM from June. Overall, prices fluctuated in three stages during July:

• Early in the month: Prices rebounded due to disruptions in Indonesia's nickel ore quota policy and a temporary decline in LME and domestic inventories.
• Mid-month: Trump announced a 15%-40% tariff increase on multiple countries starting August 1, heightening macro risk aversion and suppressing the rebound momentum.
• Month-end: Domestic "anti-rat race" policies stimulated sentiment for industrial products, with nickel prices reaching a monthly high on July 24 (the most-traded SHFE nickel contract at 125,000 yuan/mt), before pulling back sharply due to sentiment digestion and macro headwinds (a hawkish US Fed).

From a supply and demand perspective, SMM refined nickel production in July increased 3% MoM and 14% YoY, with a domestic refined nickel enterprise operating rate of 61%. In July, top-tier enterprises maintained a stable production pace, with a few smelters increasing output, driving a slight increase in overall refined nickel production. On the demand side, spot trading remained sluggish throughout July, with overall trading volume decreasing by 10%-20% MoM from June, mainly due to entering the off-season, with downstream purchases only meeting immediate needs. Additionally, nickel prices fluctuated sharply in July driven by macro sentiment, with downstream players adopting a wait-and-see attitude.

Looking ahead, the US Fed maintained interest rates at its July policy meeting, with Powell stating that "it is too early to judge a September interest rate cut," and the US dollar index strengthening. Meanwhile, the short-term stimulus effect of domestic "anti-rat race" policies on industrial products has weakened, with the Political Bureau meeting emphasizing "market-oriented and rule-of-law governance of overcapacity." It is expected that nickel will return to the logic of fundamental surplus in the future, with the off-season for demand continuing, the price center moving downward, and the price range expected to be 118,000-125,000 yuan/mt.