[SMM Nickel Midday Review] Nickel prices pulled back and then surged again on January 13, as Trump announced that countries doing business with Iran would face a 25% tariff.

SMM Nickel Market Update on January 13:

Macro and Market News:

(1) US President Donald Trump posted on social media on the afternoon of January 12, stating that any country engaging in commercial dealings with Iran will face a 25% tariff on all its commercial dealings with the US. The order takes effect immediately.

(2) Mao Ning, spokesperson of the Ministry of Foreign Affairs, presided over a regular press conference on January 12. A reporter asked about China's export of rare earths to Japan, citing reports that the review of export licenses for rare earths to Japan, including those for civilian use, had been suspended, and that some Chinese companies had notified Japanese firms that they would no longer sign new rare earth contracts. Mao Ning responded that China's measures are taken in accordance with laws and regulations, and are entirely justified, reasonable, and lawful.

Spot Market:

On January 13, the price range for SMM #1 refined nickel was 139,900-150,500 yuan/mt, with an average price of 145,200 yuan/mt, down 1,650 yuan/mt from the previous trading day. The spot premium quotation range for Jinchuan #1 refined nickel was 8,000-9,800 yuan/mt, with an average premium of 8,900 yuan/mt, down 100 yuan/mt from the previous trading day. The spot premium/discount quotation range for mainstream domestic brands of electrodeposited nickel was -200-600 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (2602) pulled back below 140,000 yuan/mt in early trading before rallying again, closing the morning session at 141,910 yuan/mt, up 0.23%.

Nickel prices pulled back before rising again. The current nickel prices are at odds with the supply-demand imbalance; on one hand, inventory continues to increase significantly, while on the other hand, nickel prices remain firm. The market is still in a fierce tug-of-war between "strong expectations for Indonesian policies" and "the reality of high inventory and weak demand," which may lead to increased volatility in the future. The trading range for the most-traded SHFE nickel contract is expected to remain between 128,000-145,000 yuan/mt.