[SMM Analysis] Nickel prices retreated after a rapid rise this week due to supply-side disruptions.

This week, nickel prices overall showed a pattern of retreating after a rapid rise. The most-traded SHFE nickel contract (2511) opened the week at 122,790 yuan/mt, then pulled back, closing at 121,380 yuan/mt on the 26th, down 0.12% WoW. LME nickel prices also dropped slightly this week, with the latest quote at $15,210/mt, a decrease of 0.43%. In the spot market, the average price of SMM #1 refined nickel this week was 122,720 yuan/mt, down 300 yuan/mt WoW. The average premium for Jinchuan nickel this week was 2,350 yuan/mt, flat WoW. The premium range for mainstream electrodeposited nickel remained at -100-200 yuan/mt this week, relatively stable. In terms of transactions, spot trading of refined nickel improved this week, mainly due to downstream stockpiling demand ahead of the National Day holiday, leading to an increase in trading volume.

During the week, Indonesia's Ministry of Energy and Mineral Resources imposed administrative sanctions on 190 mining companies that had not paid reclamation guarantees, involving about over 30 nickel miners. Combined with disruptions from a copper mine incident in Indonesia, these factors stirred market concerns about the stability of mine-side supply, leading to a rebound in nickel prices. Data released this week from the US showed the final Q2 GDP annualized quarter-on-quarter rate was significantly revised up to 3.8%, a two-year high. Meanwhile, initial jobless claims for the week fell to 218,000. The strong data boosted the US dollar, putting downward pressure on base metals like nickel. During a symposium with US friendship groups in New York, Premier Li Qiang stated that the industrial structures of China and the US are highly complementary, and strengthening economic and trade cooperation is mutually beneficial, bringing positive expectations for the global trade environment and, to some extent, easing market pessimism. Nickel prices are expected to remain volatile in the short term, with the most-traded SHFE nickel contract referenced in the range of 120,000-124,000 yuan/mt.

Inventory side, inventory in the Shanghai Bonded Zone was approximately 3,700 mt this week, flat WoW.

Domestic social inventory was approximately 40,800 mt, with a destocking of 656 mt WoW.