[SMM Nickel Midday Review] Nickel prices experienced a significant decline on October 28, while nickel inventory reached a new record high.

SMM Nickel October 28 News:

Macro and Market News:

(1) On October 27, Wang Yi, Member of the Political Bureau of the CPC Central Committee and Minister of Foreign Affairs, held a telephone conversation with US Secretary of State Rubio. Wang Yi stated that as long as both sides fully implement the important consensus reached by the two heads of state, adhere to the spirit of equality, respect, and mutual benefit, and insist on resolving differences through dialogue while abandoning the practice of resorting to pressure, it is possible to stabilize and advance the bilateral relationship. Rubio noted that the US-China relationship is the most important bilateral relationship in the world and expressed anticipation that high-level interactions would send positive signals to the world.

(2) At the listing ceremony for the first batch of newly registered enterprises on the Sci-Tech Innovation Board's Growth Enterprise Market, Li Chao, Vice Chairman of the China Securities Regulatory Commission (CSRC), stated in his speech that the CSRC will expedite research and planning for the capital market's strategic tasks and major measures during the 15th Five-Year Plan period. He emphasized adhering to the main line of work focused on preventing risks, strengthening supervision, and promoting high-quality development, and unswervingly following the path of financial development with Chinese characteristics. Guided by deepening comprehensive reforms in capital market investment and financing, the CSRC will comprehensively advance a new round of capital market reform and opening-up, continuously enhance the inclusiveness, adaptability, attractiveness, and competitiveness of China's capital market, and better serve the development goals of the 15th Five-Year Plan and the construction of a financial powerhouse.

Spot Market:

On October 28, the price range for SMM #1 refined nickel was 120,700-123,600 yuan/mt, with an average price of 122,150 yuan/mt, down 900 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan #1 refined nickel was 2,200-2,400 yuan/mt, with an average premium of 2,300 yuan/mt, down 150 yuan/mt from the previous trading day. The spot premium/discount quotation range for mainstream domestic brands of electrodeposited nickel was -300-100 yuan/mt. Due to the contract rollover, both premiums and discounts declined.

Futures Market:

The most-traded SHFE nickel contract (2512) opened lower and trended downward during the night session, closing down 0.87% by the end of the session. On the 28th, it remained in the doldrums during the morning session, settling at 121,150 yuan/mt by the midday close, down 0.96%.

Market bets on the probability of a US Fed interest rate cut in October reached as high as 97.3%, and positive progress was made in China-US economic and trade consultations, with preliminary consensus reached on a series of issues including tariffs. This development alleviated market concerns about an escalation in trade friction. Despite favorable factors on the macro front, such as interest rate cut expectations and trade easing, LME nickel inventory continued to climb to 251,238 mt, hitting a new record high. The high inventory situation continues to confirm the supply surplus in the nickel market, serving as the most direct factor suppressing nickel prices. Nickel prices are expected to move sideways in the near term, with a reference price range of 120,000-124,000 yuan/mt.