[SMM Nickel Midday Review] Nickel prices surged significantly on September 1, driven by the Jakarta incident in Indonesia.

SMM Nickel September 1 Report:

Macro news:

(1) Recently, large-scale demonstrations occurred in Jakarta and other Indonesian cities, with multiple police stations, train stations, and government buildings burned down, resulting in casualties. President Prabowo intervened to ease tensions and made concessions, promising to cancel several controversial parliamentary allowances.

(2) On August 29, Premier Li Qiang chaired an executive meeting of the State Council to study pilot work on comprehensive market-oriented allocation reform of production factors in selected regions. The meeting emphasized the need to advance reforms, leverage the decisive role of markets in resource allocation, and promote market-determined factor prices, orderly autonomous flows, and efficient, fair allocation.

Spot market:

Today, SMM #1 refined nickel prices stood at 123,000-125,600 yuan/mt, averaging 124,300 yuan/mt, up 1,900 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan #1 refined nickel was 2,100-2,300 yuan/mt, averaging 2,200 yuan/mt, down 100 yuan/mt day-on-day. The spot premiums/discounts quotation range for domestic mainstream electrodeposited nickel brands was -150-300 yuan/mt.

Futures market:

The most-traded SHFE nickel 2510 contract closed at 122,350 yuan/mt in the night session, up 1,050 yuan/mt (0.87%). It continued to strengthen in the morning session, settling at 123,350 yuan/mt by midday, with gains widening to 1.69%.

Recent strikes in Jakarta, Indonesia, fueled supply tightness concerns, driving nickel prices significantly higher. On the macro front, the US PCE inflation data met market expectations, boosting expectations for US Fed interest rate cuts, while the US dollar index fluctuated downward. Nickel prices are expected to hold up well, with a projected price range of 121,000-125,000 yuan/mt.