[SMM Analysis] Nickel Prices Rose Strongly This Week, With a Slight Destocking in Weekly Inventory

This week, global nickel market sentiment shifted. Despite unchanged weak fundamentals, rumors that Indonesia will significantly tighten nickel ore quotas in 2026 ignited market sentiment, driving global nickel prices to rise sharply and reach the highest level in H2. The most-traded SHFE nickel 2602 contract once exceeded 130,000 yuan/mt, with a weekly gain of 9%. Due to the Christmas holiday, there was no continuous trading this week. LME 3M nickel closed at $15,660/mt on Wednesday, up 5% WoW. In the spot market, the average price of SMM #1 refined nickel this week was 126,870 yuan/mt, up 9,600 yuan/mt WoW. The average premium for Jinchuan nickel this week was 7,000 yuan/mt, up 500 yuan/mt WoW. The premiums and discounts for mainstream domestic electrodeposited nickel brands ranged from -200 to 400 yuan/mt. Recent spot market transactions remained sluggish, with traders generally holding limited inventory, and wait-and-see sentiment prevailed.

Macro and market news: Expectations for domestic liquidity easing strengthened this week. The People's Bank of China conducted a 400 billion yuan MLF operation using a fixed quantity, interest rate tender, and multiple price bidding method, releasing substantial liquidity. Meanwhile, the offshore yuan strengthened against the US dollar, hitting a new high for the period, providing liquidity support and sentiment boost for the domestic commodity market. Overseas markets were closed for the Christmas holiday, with LME market suspended and major European and US macroeconomic data releases postponed. Supply contraction expectations driven by Indonesian policies are the dominant market logic. The nickel market is currently in a fierce battle between "strong expectations" and "weak reality." In the short term, nickel price center will maintain an upward fluctuating trend driven by market sentiment, but upside potential remains capped by high inventory and weak demand fundamentals. The most-traded SHFE nickel contract is expected to trade between 125,000 and 130,000 yuan/mt.

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

Domestic social inventory was about 58,000 mt, with a destocking of 846 mt WoW.