[SMM Nickel Post-Holiday Analysis] Nickel prices on the LME strengthened during the National Day holiday due to macro influences, with the domestic market showing a catch-up rally after the holiday.

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1. Macro and market news during the National Day holiday:

(1) As the two parties in the U.S. Congress failed to reach an agreement on the funding bill, the U.S. federal government experienced another "shutdown" after seven years. Starting October 1 local time, most staff of several key financial regulatory agencies, including the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission, were forced into "furlough," with some public services suspended or delayed, and the release of economic data affected. Due to the federal government shutdown, data such as U.S. initial jobless claims for the previous week, September non-farm payrolls, unemployment rate, August factory orders month-on-month, and August imports and exports were delayed. However, U.S. September ADP employment decreased by 32,000, the largest drop since March 2023, below the market expectation of 50,000.

(2) On October 3, 2025, Indonesia’s Ministry of Energy and Mineral Resources officially issued Ministerial Regulation No. 17 of 2025, namely the "Procedures for the Preparation, Submission, Approval, and Implementation Reporting of Work Plans and Budgets for Mineral and Coal Mining Activities in 2026." This regulation reverts the previously three-year RKAB approval system back to an annual system, to be re-implemented starting in 2026.

2. Spot market on the first day after the holiday:

On October 9, the SMM #1 refined nickel price was 122,100-125,100 yuan/mt, with an average price of 123,600 yuan/mt, up 1,150 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan #1 refined nickel was 2,300-2,400 yuan/mt, with an average premium of 2,350 yuan/mt, unchanged from the last trading day before the holiday. The spot premiums and discounts quotation range for mainstream domestic brands of electrodeposited nickel was -150-200 yuan/mt. Downstream players had largely completed stockpiling before the holiday, traders were short of spot cargo, and coupled with the sharp rise in nickel futures prices on the first day after the holiday, market activity was mainly inquiries, with limited spot transactions.

3. Futures Market on the First Trading Day After the Holiday:

Due to the rise in LME nickel prices during the holiday, the domestic market saw a catch-up rally in SHFE nickel after opening. The most-traded SHFE nickel 2511 contract opened at 121,300 yuan/mt on October 9, and nickel prices continued to climb during the morning session. By the close of the morning session, it was quoted at 123,330 yuan/mt, up 1.44%.

4. Outlook:

During the National Day holiday, LME nonferrous metals generally rose, with LME nickel breaking through the $15,500/mt level. Weak US ADP employment data for September led markets to anticipate a 50-basis-point interest rate cut within the year, boosting expectations for looser offshore US dollar liquidity and enhancing risk appetite in the nonferrous metals market.

The most critical variable for future nickel price trends lies in Indonesian policy. At low price levels, nickel becomes more sensitive to policy disruptions. Short-term price fluctuations will heavily depend on the actual implementation of Indonesia's mining policies, with news on quota approvals, export policies, or environmental protection crackdowns likely to cause market volatility. Meanwhile, the pace of US Fed interest rate cuts and changes in Sino-US trade relations will also impact market risk and liquidity, thereby affecting nickel prices. The most-traded SHFE nickel contract is expected to trade within a range of 120,000-124,000 yuan/mt in the short term.

In the long run, global nickel consumption growth is falling short of expectations amid a persistent supply surplus. Current LME nickel inventory has reached 232,632 mt, while SMM refined nickel social inventory stands at 41,000 mt. Against the backdrop of continuously rising global nickel inventories, the price center for nickel remains at risk of further decline.