[SMM Analysis] Nickel prices rebounded this week, while domestic inventory accumulated again.

This week, nickel prices rebounded after hitting a new low for the period, driven by macro tailwinds. The most-traded SHFE nickel contract opened higher on Monday and stabilized, then continued a strong rebound trend for three consecutive days, followed by rangebound fluctuations. It closed at 117,080 yuan/mt on Friday, up 1.99% WoW. LME nickel prices also rebounded significantly, with the latest LME nickel price at $14,850/mt on Friday, up 1.57% from the previous week. In the spot market, the average price of SMM #1 refined nickel this week was 118,930 yuan/mt, up 2,800 yuan/mt WoW. The average premium for Jinchuan nickel this week was 4,750 yuan/mt, up 100 yuan/mt WoW. The premiums and discounts for mainstream domestic electrodeposited nickel brands ranged from -100 to 300 yuan/mt, with premiums for electrodeposited nickel slightly lower. Spot circulation volume was relatively low this week, and market transactions were moderate.

From a macro perspective, expectations for a US Fed interest rate cut intensified this week, as Fed officials signaled a higher likelihood of a rate cut in December. This shift in expectations caused the US dollar index to pull back from a six-month high, weakening the US dollar and providing support for LME nickel prices denominated in US dollars. Russian President Vladimir Putin stated that the US and Russia will continue to engage, and both Russia and Ukraine exchanged views on humanitarian issues, easing concerns over geopolitical risks. Additionally, direct communication between the leaders of China and the US, along with positive signals, helped stabilize expectations for the global trade environment and boosted overall market risk appetite. Data from the National Bureau of Statistics (NBS) showed that from January to October, profits of industrial enterprises above the designated size increased by 1.9% YoY, with cumulative growth maintaining an upward trend, indicating resilience in the economic fundamentals. Nickel prices are expected to continue fluctuating and bottoming out in the near term, with the most-traded SHFE nickel contract projected to trade in the range of 114,000–118,000 yuan/mt.

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

Domestic social inventory was around 55,000 mt, with an inventory buildup of 3,089 mt WoW.