[SMM Analysis]Nickel prices surged significantly on September 12, as the macro environment warmed up, lifting the nonferrous metals sector broadly.

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Macro and Market News:
(1) The US unadjusted CPI annual rate for August registered 2.9%, the highest since January, in line with 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 recorded 263,000, surging to 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, the Indonesian 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 relevant forestry licensing regulations. The Indonesian 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 the statement from the Executive Chairman of the Forestry Task Force, hundreds of mining companies are currently listed for follow-up investigation.

Spot Market:

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

Futures Market:

The most-traded SHFE nickel contract (2510) settled at 120,880 yuan/mt in the night session, up 430 yuan, a gain of 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.As of the midday close, it was quoted at 121,810 yuan/mt, up 1.13%.

US CPI data and jobless claims numbers both reinforced market expectations for a US Fed interest rate cut in September. Today, the nonferrous metals sector saw a broad rally, with nickel prices among the top gainers. Fundamentally, spot market transactions in September recovered somewhat compared to August but fell short of the previous "Golden September" expectations. LME nickel inventory continued to climb, with a buildup of 7,842 mt in the recent week, reaching 223,152 mt as of September 12.In August, SMM refined nickel production increased by 7% MoM. With the commissioning of new refined nickel projects, production is expected to continue rising in September. High inventory and supply pressure limited the price increase.

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 effects 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.