Nickel prices moved wildly this week under the influence of external macro factors. The escalation of tensions in the Middle East triggered trading on global recession expectations, while the US Fed’s raised inflation expectations reinforced concerns over tightening, leading to panic selling in SHFE and LME nickel prices. SHFE nickel once fell below the key threshold of 130,000 yuan/mt. However, solid support from the supply side—tighter Indonesian RKAB quotas, लगातार rising ore prices, and the risk of sulfur supply disruptions—continued to provide a strong floor for nickel prices. After falling below 130,000 yuan/mt, nickel prices quickly rebounded and surged strongly to 135,000 yuan/mt. In the spot market, the average price of SMM #1 refined nickel was 137,890 yuan/mt this week, down 3,450 yuan/mt WoW. The average premium for Jinchuan nickel was 6,600 yuan/mt this week, down 200 yuan/mt WoW. Premiums for mainstream China brands of electrodeposited nickel ranged from -300 to 400 yuan/mt. Overall spot trading was average this week, with transactions improving markedly only on the day of the sharp decline, as downstream sentiment for pricing strengthened.
The core macro driver this week came from geopolitical conflict in the Middle East. Concerns over shipping through the Strait of Hormuz continued to intensify, heating up market trading on expectations of a global economic recession and sharply lifting risk-off sentiment. The US Fed’s March FOMC economic projections sent a hawkish signal, while US February PPI rose 0.7% MoM, far above the expected 0.3%. The YoY increase reached 3.4%, the highest in a year. Strong inflation data significantly cooled market expectations for a US Fed interest rate cut, and the US dollar index strengthened continuously. In China, the PBOC conducted large-scale reverse repo operations this week to ensure ample liquidity at the end of Q1.
Inventory side, Shanghai Bonded Zone inventory was about 2,200 mt this week, unchanged WoW. China social inventory was about 88,000 mt, with an inventory buildup of about 1,000 mt WoW.
Current nickel prices are in a stage of intense tug-of-war between macro headwinds and supply risks. In the short term, tighter Indonesian RKAB quotas, persistently rising ore prices, and the risk of sulfur supply disruptions are building a solid floor below, but high inventory and the slow recovery in end-use demand are still capping upside room. The core trading range for the most-traded SHFE nickel contract next week is expected to be 130,000-140,000 yuan/mt.
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