[SMM Analysis] Nickel prices showed a unilateral decline this week, while weekly inventory experienced a slight decrease.

Nickel prices showed a unilateral decline this week, with the most-traded SHFE nickel contract successively breaking through key support levels and LME nickel prices also weakening. The core driver of the price decline was the intensification of the supply-demand imbalance in nickel, with inventories climbing to a near five-year high, while a reduced expectation for interest rate cuts from a macro perspective further dampened market sentiment. Among these, the most-traded SHFE nickel contract broke the consolidation range that had persisted for nearly four months, falling all the way from 121,000 yuan/mt to close at 114,050 yuan/mt on Friday, breaking below the June low, with a weekly decline of 3.21%. LME nickel prices also performed weakly, dropping from $14,870/mt to below $14,400/mt, with the latest 3M nickel closing at $14,380/mt, a weekly decline of 3.36%. In the spot market, the average price of SMM #1 refined nickel this week was 116,630 yuan/mt, down 2,900 yuan/mt WoW. The average premium for Jinchuan nickel this week was 4,000 yuan/mt, up 300 yuan/mt WoW. The premium/discount range for mainstream domestic brands of electrodeposited nickel was 0-500 yuan/mt. This week, affected by refined nickel smelters switching production to nickel sulphate, the external sales volume of nickel plates decreased, the spot circulation volume declined, and premiums strengthened.

From a macro perspective, the US September non-farm payrolls data this week showed a contradictory combination of "strong job growth" and "an unemployment rate rising to 4.4%", leading to a significant reduction in market expectations for US Fed interest rate cuts. Simultaneously, internal Fed concerns about inflation have led to hawkish rhetoric, causing confusion in market expectations regarding the future pace of interest rate cuts. Risk-off sentiment notably intensified, the US dollar index remained strong, once breaking through the 100 mark to hit a six-month high, creating macro-level pressure on nickel prices. In the short term, after consecutive declines, nickel prices are showing signs of being oversold. Under expectations for refined nickel production cuts, the recent pace of inventory accumulation is expected to slow, potentially providing room for a staged rebound. However, dominated by the surplus logic, nickel prices are unlikely to achieve a genuine trend reversal; prices are expected to continue consolidating and bottoming out, with the price range for the most-traded SHFE nickel contract forecasted at 114,000-118,000 yuan/mt.

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

Domestic social inventory was about 52,000 mt, destocking 855 mt WoW.