[SMM Analysis] Nickel Prices Rebounded This Week, Domestic Inventory Buildup Resumed

Nickel prices hit a new low for the current phase before rebounding on macro tailwinds. The most-traded SHFE nickel contract opened higher on Monday and stabilized, then continued to rally strongly for three consecutive days before fluctuating rangebound. 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 was 118,930 yuan/mt this week, up 2,800 yuan/mt WoW. The average premium for Jinchuan nickel was 4,750 yuan/mt, up 100 yuan/mt WoW. Premiums and discounts for mainstream domestic electrodeposited nickel ranged from -100 to 300 yuan/mt, with premiums for electrodeposited nickel edging lower. Spot circulation was limited 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 supporting LME nickel prices denominated in US dollars. Russian President Vladimir Putin stated that the US and Russia will maintain contact, and both Russia and Ukraine engaged in discussions 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 risk appetite. Data from the National Bureau of Statistics (NBS) showed that profits of industrial enterprises above the designated size increased 1.9% YoY from January to October, 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, inventory in the Shanghai Bonded Zone stood at around 2,200 mt this week, down 200 mt WoW. Domestic social inventory was approximately 55,000 mt, with an inventory buildup of 3,089 mt WoW.