[SMM Analysis] Nickel prices performed relatively weak this week, spot cargo transactions were sluggish, and inventory continued to accumulate.

Nickel prices were in the doldrums this week, dominated by loose supply and demand. Although the US Fed cut interest rates as expected, nickel prices failed to get an effective boost and showed a clear downtrend. The most-traded SHFE nickel contract started the week relatively firm, but then accelerated its pullback due to weak domestic demand, closing at 115,590 yuan/mt on Friday, down 1.84% WoW. LME nickel prices also weakened, falling consecutively, down 2.27% WoW. On the spot market, the average price of SMM #1 refined nickel was 119,350 yuan/mt this week, down 1,850 yuan/mt WoW. The average premium for Jinchuan nickel was 5,100 yuan/mt this week, up 300 yuan/mt WoW. The premiums and discounts for mainstream domestic electrodeposited nickel brands ranged from -100 to 400 yuan/mt. Spot market trading was sluggish this week, with downstream users mainly doing stockpiling for rigid demand and taking a wait-and-see stance.

On the macro front, the US Fed implemented a "hawkish rate cut" as expected, cutting the federal funds rate by 25 bps for the third time this year. The Central Economic Work Conference indicated that more proactive fiscal policy and appropriately easy monetary policy will continue next year. Meanwhile, market sentiment diverged significantly this week. Nonferrous metals such as copper and tin hit new highs driven by tight supply, strong demand, and macro tailwinds, while nickel's weak performance due to its own supply-demand imbalance stood in stark contrast. Nickel prices are expected to remain in the doldrums in the near term, with the core fluctuation range for the most-traded SHFE nickel contract seen at 112,000-117,000 yuan/mt.

Inventory side, Shanghai Bonded Zone inventory stood at about 2,200 mt this week, flat WoW.

Domestic social inventory was about 59,000 mt, up 2,122 mt WoW.