[SMM Analysis] Nickel prices were relatively weak this week, with sluggish spot transactions and continued inventory buildup.

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 was relatively firm at the beginning of the week, but prices accelerated their pullback later due to weak domestic demand, closing at 115,590 yuan/mt on Friday, down 1.84% WoW. LME nickel prices also weakened, falling consecutively and down 2.27% WoW. In 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, up 300 yuan/mt WoW. Premiums and discounts for mainstream domestic electrodeposited nickel brands ranged from -100 to 400 yuan/mt. Spot market transactions were sluggish this week, with downstream consumers mainly stockpiling for rigid demand and adopting a wait-and-see stance.

On the macro front, the US Fed implemented a "hawkish rate cut," carrying out its third interest rate cut of the year as expected, lowering the federal funds rate by 25 basis points. The Central Economic Work Conference indicated that more proactive fiscal policies and appropriately loose monetary policies will continue next year. Meanwhile, market sentiment was clearly divided this week: nonferrous metals such as copper and tin hit new highs driven by tight supply, strong demand, and macro tailwinds, while nickel performed weakly due to its prominent supply-demand imbalance, forming a sharp contrast. Nickel prices are expected to remain in the doldrums in the short term, with the core fluctuation range for the most-traded SHFE nickel contract referenced at 112,000-117,000 yuan/mt.

Inventory side, inventory in the Shanghai Bonded Zone was about 2,200 mt this week, flat WoW.

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