[SMM Analysis] Nickel prices fluctuated downward this week, while downstream stocking enthusiasm remained relatively high.

Nickel prices fluctuated downward overall this week, with market sentiment turning noticeably pessimistic under the dual impact of persistently high inventory pressure and macro events. At the beginning of the week, the most-traded SHFE nickel contract came under pressure and moved lower, once touching a weekly low of 118,980 yuan/mt. Subsequently, prices found support near the key 119,000 yuan/mt level and fluctuated rangebound. LME nickel prices moved largely in sync with domestic prices, falling below $15,000/mt during the week, with the latest quote at $15,065/mt, down 1.28% WoW. In the spot market, the average price of SMM #1 refined nickel was 121,230 yuan/mt this week, down 1,050 yuan/mt WoW. The average spot premium for Jinchuan nickel was 2,800 yuan/mt this week, up 450 yuan/mt WoW. The premiums and discounts for mainstream domestic brands of electrodeposited nickel ranged from -150 to 300 yuan/mt, with the level of premiums/discounts rising WoW. Spot premiums for nickel cathode strengthened significantly this week, and as prices were at relatively low levels, downstream purchasing sentiment improved, leading to active stockpiling.

From a macro perspective, the US Fed sent hawkish signals: although it cut interest rates by 25 basis points as expected at its October meeting, post-meeting comments from Chairman Powell were relatively hawkish, emphasizing that a further rate cut in December is "far from a done deal." This significantly cooled market expectations for another rate cut before year-end, pushed the US dollar index strongly above the 100 mark to a three-month high, and put pressure on nonferrous metal prices. The ongoing US government shutdown led to delays in the release of important economic data, exacerbating market concerns about liquidity and the economic outlook. LME nickel inventory increased by a further 378 mt this week, reaching a record high of 253,128 mt. Nickel prices are expected to rebound slightly in the near term, but the core fluctuation range is still projected to be 119,000-123,000 yuan/mt.

Inventory side, Shanghai Bonded Zone inventory was around 2,400 mt this week, down 200 mt WoW.

Domestic social inventory was about 49,100 mt, showing an inventory buildup of 1,029 mt WoW.