[SMM Nickel Midday Review] Nickel prices surged significantly on September 12, with the broader macro environment warming up, leading to a widespread rally in the non-ferrous metals sector.

SMM Nickel September 12 News:

Macro and Market Updates:

(1) The US unadjusted CPI annual rate for August registered 2.9%, the highest since January, meeting market expectations. The US seasonally adjusted CPI monthly rate for August registered 0.4%, the highest since January. US initial jobless claims for the week ending September 6 surged to 263,000, hitting a nearly four-year high. Traders fully priced in three interest rate cuts by the US Fed before the end of 2025.

(2) According to reports, Indonesia's Forestry Task Force has taken over more than 148 hectares of land occupied by PT Weda Bay Nickel in Halmahera, North Maluku. This action was taken due to the company's violation of forestry licensing regulations. Indonesia's Ministry of State-Owned Enterprises will manage the area and impose fines on the company. This move also marks the first seizure action since Indonesian President Prabowo took office, fulfilling his commitment to crack down on illegal practices in the mining industry. The Forestry Task Force reiterated that it will continue to take enforcement measures against other enterprises violating mining operation regulations. According to a statement from the executive chairman of the Forestry Task Force, hundreds of mining companies are currently under follow-up investigation.

Spot Market:

On September 12, SMM #1 refined nickel prices ranged from 121,400 to 124,300 yuan/mt, with an average price of 122,850 yuan/mt, up 1,400 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan #1 refined nickel was 2,200-2,300 yuan/mt, with an average premium of 2,250 yuan/mt, flat from the previous trading day. The spot premium/discount quotation range for domestic mainstream brand electrodeposited nickel was -100 to 200 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (2510) settled at 120,880 yuan/mt in the night session, up 430 yuan or 0.36%. On the 12th, the nonferrous metals sector generally moved upward in the morning session, with nickel prices rising to a high of 122,000 yuan/mt before pulling back slightly. By the midday close, it was quoted at 120,290 yuan/mt, down 0.17%.

US CPI data and jobless claims numbers both reinforced market expectations for a US Fed interest rate cut in September. The nonferrous metals sector saw broad gains today, with nickel prices among the top performers. Fundamentally, spot market transactions in September improved MoM from August but fell short of previous "Golden September" expectations. LME nickel inventory continued to climb, accumulating 7,842 mt in the past week to reach 223,152 mt as of September 12, the highest since August 2021. SMM refined nickel production in August increased 7% MoM. With new nickel projects coming online, production is expected to continue rising in September. High inventory and supply pressures are limiting the upside.

Subsequently, attention should be paid to the outcome of the US Fed's September interest rate meeting and its impact on global liquidity, as well as the actual implementation effect of Indonesia's policy against illegal mining. Nickel prices are expected to remain volatile in the short term, with the most-traded SHFE nickel contract projected to trade within the range of 120,000-124,000 yuan/mt.