[SMM Analysis] The nickel market was under pressure overall this week, and domestic inventory continued to accumulate.

This week, the global nickel market was generally under pressure, with both SHFE and LME nickel prices continuing to decline. The market sentiment leaned pessimistic, weighed down by both macro front pressures and high fundamental inventory. The price of the most-traded SHFE nickel contract fell below 120,000 yuan/mt again, breaking out of its previous sideways movement platform and showing a downward trend. It closed at 117,080 yuan/mt on Friday, with a weekly decline of 2.16%. LME nickel prices weakened further after moving sideways at low levels, with the latest quote on Friday at $14,860/mt, down 1.07% WoW. In the spot market, the average price of SMM #1 refined nickel this week was 120,640 yuan/mt, down 1,300 yuan/mt WoW. The average spot premium for Jinchuan nickel this week was 3,700 yuan/mt, up 900 yuan/mt WoW. The premiums and discounts for mainstream domestic brands of electrodeposited nickel ranged from -100 to 400 yuan/mt. Spot premiums for nickel cathode strengthened significantly this week, with Jinchuan premiums posting a large increase. Influenced by the price drop, downstream transactions were relatively good at the beginning of the week. However, as prices continued to fall, end-user purchasing wait-and-see sentiment increased.

From a macro perspective, significant internal divergence among US Fed officials on interest rate issues heightened market uncertainty regarding the policy path this week. Concurrently, the delay or absence of key US economic data due to the government shutdown deprived the market of reliable benchmarks for assessing the Fed's policy, putting risk assets under pressure and tilting market sentiment towards caution. Remarks from the San Francisco Fed President that a December interest rate cut would be premature reinforced the cautious mood. Domestically, the cumulative increase in aggregate social financing for the first ten months reached 30.9 trillion yuan, 383 billion yuan more than the same period last year. The M2 balance at the end of October grew 8.2% YoY, indicating reasonably ample liquidity, but this had limited impact on the current nickel market. Nickel prices are expected to struggle to break out of their weak pattern going forward, although downside room is limited due to cost support. Further attention should be paid to shifts in macro sentiment and the progress of RKAB approvals for Indonesian nickel ore. The expected price range is 116,000-120,000 yuan/mt.

Inventory side, inventory in the Shanghai Bonded Zone was approximately 2,400 mt this week, flat WoW.

Domestic social inventory was approximately 53,000 mt, with an inventory buildup of 3,981 mt WoW.