Nickel Prices Soar on Supply, Geopolitical Concerns Amid Surplus Risks

Published: Jan 7, 2026 09:05

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During the night session on January 6, 2026, multiple SHFE nickel contracts surged by their daily limit, with the most-traded SHFE nickel contract (2602) closing up at 147,720 yuan/mt, while the LME nickel 3M contract reached an intraday high of $18,785/mt. The sharp rise in nickel prices resulted from a combination of factors, including expectations of supply tightening policies in Indonesia, geopolitical risks arising from US military actions against Venezuela, and macro fund inflows. Speculative capital flooded into nickel futures contracts, driving the weighted open interest of SHFE nickel above 370,000 lots.
However, the fundamental outlook for nickel has not completely reversed. Spot transaction activity remains weak, with downstream users showing limited acceptance of high-priced nickel plates. The latest LME inventory stood at 255,000 mt, while SMM's social inventory of refined nickel was approximately 59,000 mt, indicating a slight inventory buildup. Moreover, against the backdrop of soaring nickel prices, smelters have shown strong willingness to increase production. SMM refined nickel output rose 22% MoM in December and is expected to increase another 18% MoM in January. With no improvement in downstream demand, there is a possibility of significant inventory accumulation in the future, intensifying the battle between "expectations of tightening" and "actual surplus."

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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