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

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Nickel prices pulled back this week under pressure from fundamentals. In the futures market, the most-traded SHFE nickel contract (2511) closed at 121,160 yuan/mt on Friday, down 1.89% WoW, with support forming around the 120,000 yuan/mt level. The market is caught in a stalemate characterized by "cost support at the bottom and inventory pressure at the top." LME nickel prices settled at $15,140/mt on Friday, down 0.53% WoW, showing synchronized weakness. 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 premium for Jinchuan nickel this week was 2,400 yuan/mt, up 100 yuan/mt WoW. The premium for mainstream domestic electrodeposited nickel brands ranged from -100 to 100 yuan/mt, showing a slight decrease. Trading sentiment in the spot market improved this week, with overall trading volume picking up.

The recent international macro environment has been complex and volatile, with escalating Sino-US trade friction becoming a key market focus. US President Donald Trump threatened to impose 100% tariffs on Chinese goods starting November 1, prompting China to take countermeasures, which intensified market risk-off sentiment. A meeting between Chinese and US leaders is expected to 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 most-traded SHFE nickel contract is expected to trade within a reference range of 120,000–124,000 yuan/mt.

Inventory side, Shanghai Bonded Zone inventory stood at about 3,700 mt this week, flat WoW.

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