[SMM Analysis] Nickel prices under pressure as US dollar strengthens, social inventory slightly decreases

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This week, nickel prices fell amid macro pressures from a stronger US dollar and a weak fundamental backdrop, with market sentiment being cautious. The most-traded SHFE nickel 2510 contract declined this week, closing at 119,610 yuan/mt on Friday, down 0.48% for the day and 0.99% over the past five trading days. LME nickel prices also weakened, with the latest quote at $14,940/mt, down 1.74% WoW. In the spot market, the average price of SMM #1 refined nickel was 121,170 yuan/mt this week, down 950 yuan/mt WoW. The premium for Jinchuan nickel fluctuated significantly, with the average premium increasing by 400 yuan/mt WoW. Traders showed strong reluctance to budge on prices, and the premium range for mainstream electrodeposited nickel remained at -100-300 yuan/mt this week. Meanwhile, due to the decline in futures prices, downstream procurement volume increased this week.

From a macro perspective, bullish and bearish factors were intertwined. This week, several US Fed officials spoke, maintaining a generally hawkish stance and being cautious about interest rate cuts. Bostic still expects one rate cut this year but is concerned about the labour market. The US dollar index continued to rebound, reaching near the 98 level, putting pressure on dollar-denominated nickel prices. Domestically, China will introduce a new-type policy financial tool worth 500 billion yuan, focusing on emerging industries and infrastructure areas such as the digital economy, artificial intelligence, and green low-carbon sectors, which will help boost market confidence and stabilize economic growth. In the short term, nickel prices are expected to remain in the doldrums within the price range of 119,000-123,000 yuan/mt.

In terms of inventory, the Shanghai Bonded Zone inventory was around 4,700 mt this week, flat WoW. Domestic social inventory was approximately 40,900 mt, with destocking of 1,019 mt WoW.