[SMM Analysis] Nickel pulled back this week due to fundamental pressure, and inventory levels increased further.

This week, nickel prices pulled back under fundamental pressure. In the futures market, the most-traded SHFE nickel contract (2511) closed at 121,160 yuan/mt on Friday, down 1.89% WoW, with the 120,000 yuan/mt level forming short-term support; the market is in a stalemate characterized by "cost support and inventory pressure." LME nickel prices settled at $15,140/mt on Friday, down 0.53% WoW, also weakening. In the spot market, the average price of SMM #1 refined nickel this week was 122,270 yuan/mt, down 1,500 yuan/mt WoW. The average Jinchuan nickel premium this week was 2,400 yuan/mt, up 100 yuan/mt WoW. The premium range for mainstream domestic electrodeposited nickel brands was -100-100 yuan/mt, showing a decrease. Trading-wise, spot trading sentiment improved this week, with overall trading volume picking up.

The recent international macro environment has been complex and volatile, with escalating China-US trade friction becoming a key market focus. US President Trump threatened to impose 100% tariffs on Chinese products starting November 1, and China has taken related countermeasures, intensifying market risk-off sentiment. A meeting between Chinese and US leaders may take place during the APEC summit in South Korea at the end of this month. Meanwhile, the US government shutdown continues, stalling the release of key economic data. US ADP employment fell by 32,000 in September, the largest drop since March 2023, strengthening market expectations for a US Fed interest rate cut. Nickel prices are expected to fluctuate amid the interplay between policy expectations and fundamental realities. Tightening Indonesian mining policies and raw material shortages provide some cost support for nickel prices, but high inventories continue to constrain upside room. The reference trading range for the most-traded SHFE nickel contract is 120,000-124,000 yuan/mt.

Inventory-wise, Shanghai Bonded Zone inventory was about 3,700 mt this week, flat WoW.

Domestic social inventory was about 47,700 mt, with an inventory buildup of 4,014 mt WoW.