[SMM Analysis] The global nickel market experienced a roller coaster ride this week, while domestic inventory continued to increase significantly.

This week, the global nickel market experienced a roller-coaster ride. At the start of the week, driven by the core narrative of Indonesia's 2026 nickel ore quotas and coupled with optimistic sentiment over a global macro shift toward looser liquidity, nickel prices extended last week's surge, with LME nickel hitting $18,000/mt and the most-traded SHFE nickel contract approaching 150,000 yuan/mt. However, the rally did not last, as the sharp contradiction between "strong expectations" and "weak reality" quickly emerged. Mid-week, LME nickel inventory surged by 20,000 mt in a single day, bringing the total to 270,000 mt. On the other hand, downstream acceptance of high prices remained very low, leading to a cliff-like correction in nickel prices in the latter part of the week, with market sentiment shifting abruptly from extreme optimism to cautious wait-and-see. In the spot market, the average price of SMM #1 refined nickel this week was 144,540 yuan/mt, up 4,350 yuan/mt WoW. The average premium for Jinchuan nickel averaged 8,700 yuan/mt this week, rising 1,400 yuan/mt WoW. Premiums and discounts for mainstream domestic electrodeposited nickel ranged from -200 to 300 yuan/mt. Currently, downstream acceptance of high-priced nickel plates is low, and speculative stockpiling is relatively evident in the spot market.

On the macro front, US employment data released this week indicated continued economic resilience, leading markets to push back expectations for the timing of US Fed interest rate cuts, which boosted the US dollar index. Domestically, accommodative policies provided a floor. The People's Bank of China's work conference clarified that moderately easy monetary policy will continue in 2026, ensuring ample liquidity to support economic recovery and providing underlying support for domestic commodity markets. Going forward, close attention should be paid to the specifics and enforcement of Indonesia's nickel industry policies, as volatility may intensify.

The most-traded SHFE nickel contract is expected to trade between 128,000 and 145,000 yuan/mt.

Inventory side, Shanghai Bonded Zone inventory stood at around 2,200 mt this week, flat WoW. Domestic social inventory was about 61,000 mt, with a buildup of 2,126 mt WoW.