[SMM Nickel Midday Review] Nickel prices dropped slightly on October 31, while spot premiums strengthened.

SMM Nickel October 31:

Macro and Market News:

(1) A spokesperson for the Ministry of Commerce responded to media inquiries regarding the joint arrangements for the China-US economic and trade consultations in Kuala Lumpur. The spokesperson stated that the China-US economic and trade teams reached consensus and achieved results in several areas through the Kuala Lumpur consultations: The US side will cancel the additional 10% so-called "fentanyl tariff" imposed on Chinese goods, and the additional 24% reciprocal tariff will be suspended for another year; the US will suspend the implementation of the 50% penetration rule for export controls for one year; the US will suspend its Section 301 investigations into China's maritime sectors, among others, for one year; China will properly resolve the TikTok issue with the US.

(2) The European Central Bank unanimously decided to keep the deposit facility rate unchanged at 2%, holding steady for the third consecutive meeting. The Bank of Japan maintained its interest rates unchanged, with two officials voting in favor of a 25-basis-point rate hike.

Spot Market:

On October 31, the SMM #1 refined nickel price was 120,500-123,400 yuan/mt, with an average price of 121,950 yuan/mt, down 250 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan #1 refined nickel was 2,500-2,600 yuan/mt, with an average premium of 2,550 yuan/mt, up 100 yuan/mt from the previous trading day. The spot premium/discount quotation range for mainstream domestic brands of electrodeposited nickel was -200-300 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (2512) moved in the doldrums during the night session, closing slightly lower at the end of the session. On the 31st, SHFE nickel opened lower in the morning session, with futures showing a weak and sideways trend. As of the midday close, it was reported at 120,620 yuan/mt, down 0.51%.

The outcomes of the meeting between the Chinese and US heads of state on October 30 were relatively positive. The US side canceled the additional 10% "fentanyl tariff" imposed on Chinese goods and continued the suspension of the 24% reciprocal tariff for one year. Simultaneously, the US will suspend its Section 301 investigation measures targeting China's maritime, logistics, and shipbuilding industries for one year. This progress alleviated market concerns about an escalation in trade friction. However, LME nickel inventory continued to climb to 251,706 mt (an increase of 270 mt on October 29), hitting a new record high. Nickel prices are expected to continue moving sideways in the near term, with a reference price range of 120,000-124,000 yuan/mt.