[SMM Nickel Midday Review] Nickel prices declined on September 4, as the joint working group of the Ministry of Finance and the People's Bank of China convened its second head meeting.

SMM Nickel Market Update on September 4:

Macro News:

(1) Recently, the joint working group of the Ministry of Finance and the People's Bank of China held its second head meeting. The meeting conducted in-depth discussions on topics including financial market operations, government bond issuance management, central bank treasury bond trading operations, and improving the offshore RMB treasury bond issuance mechanism. The next step is to continue promoting the stable and healthy development of China's bond market and jointly ensure the effective implementation of fiscal and monetary policies.

(2) Driven by expectations for US Fed interest rate cuts and market risk-aversion sentiment, spot gold rose for seven consecutive days, briefly approaching $3,580/oz during the session and hitting another record high, eventually closing up 0.73% at $3,559.13/oz. Spot silver broke through $41/oz, reaching a new high since 2011, and finally closed up 0.81% at $41.22/oz.

Spot Market:

Today, the SMM #1 refined nickel price ranged between 120,700-123,400 yuan/mt, with an average price of 122,050 yuan/mt, down 400 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan #1 refined nickel was 1,900-2,200 yuan/mt, with an average premium of 2,050 yuan/mt, down 50 yuan/mt from the previous trading day. The spot premiums/discounts quotation range for mainstream domestic electrodeposited nickel brands was -200-200 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (2510) edged higher in the night session, closing at 121,970 yuan/mt, up 470 yuan/mt (a 0.39% gain). However, prices pulled back rapidly after today's opening and continued to decline during the session. By the midday close, it was quoted at 120,880 yuan/mt, down 0.51%.

The US dollar index rebounded recently, and the stronger US dollar directly weighed on nickel prices, while funds shifted to safe-haven assets like gold and silver as they strengthened. The US non-farm payrolls data for August is set to be released this week. If the data falls short of expectations, it may reinforce expectations for interest rate cuts. Nickel prices are expected to hold up well in the near term, with a projected price range of 121,000-125,000 yuan/mt.