[SMM Analysis] Nickel Prices Fell First and Then Rose This Week, While Refined Nickel Inventory Continued to Accumulate

Nickel prices fell first and then rose this week, with a significant increase on Friday driven by positive macro factors. As of September 12, the most-traded SHFE nickel contract 2510 closed at 121,960 yuan/mt, up 0.73% WoW. LME nickel prices also edged higher, with the latest quote at $15,340/mt, up $55 or 0.36% WoW. In the spot market, the average price of SMM #1 refined nickel was 122,050 yuan/mt this week, up 1,150 yuan/mt WoW. The average premium for Jinchuan nickel was 2,200 yuan/mt, up 100 yuan/mt WoW, while the premium range for mainstream electrodeposited nickel remained at -200-200 yuan/mt, with premiums for electrodeposited nickel declining. In terms of transactions, downstream procurement demand recovered in September but fell short of previous expectations for the September peak season.

US economic data were the main macro factors affecting nickel prices this week: the US unadjusted CPI YoY for August came in at 2.9%, the highest since January, meeting market expectations. The US seasonally adjusted CPI MoM for August was 0.4%, also the highest since January. US initial jobless claims for the week ending September 6 surged to 263,000, the highest in nearly four years. These data strengthened market expectations for a US Fed interest rate cut in September, with traders fully pricing in three rate cuts by the end of 2025. On the other hand, the Indonesian government's crackdown on illegal mining also drew market attention. The Indonesian Task Force for Mining and Forestry has taken over more than 148 hectares of land occupied by PT Weda Bay Nickel on Halmahera Island, North Maluku, marking the first seizure action since Indonesian President Prabowo took office to fulfill his commitment to crack down on illegal practices in the mining industry. However, this action did not have a substantial impact on nickel ore supply. Nickel prices are expected to remain volatile in the short term, with the most-traded SHFE nickel contract reference range at 120,000-124,000 yuan/mt.

Inventory side, Shanghai Bonded Zone inventory was about 3,700 mt this week, down 600 mt WoW.

Domestic social inventory was about 41,100 mt, up 1,125 mt WoW.