[SMM Nickel Midday Review] Nickel prices extended their downward trend on June 11, with US May CPI YoY growth hitting a 3-year high.

SMM nickel June 11 news:

Macro and market news:

(1) The US-Iran conflict reignites; at 17:15 ET on June 10, US Central Command forces carried out "self-defense strikes" against multiple targets in Iran in response to Iran's "unprovoked and sustained" attacks; Iran's Armed Forces Khatam al-Anbiya Central Headquarters announced the closure of the Strait of Hormuz, sending international oil prices higher.

(2) On Wednesday local time, data released by the US Department of Labor showed that US May CPI inflation was broadly in line with market expectations, but driven by a sharp rise in oil prices due to the Middle East war, the May CPI accelerated on a monthly basis, increasing price pressure on consumers and further reinforcing the case for the Fed to keep interest rates high and remain on hold for longer.

Spot market:

On June 11, the price of SMM #1 refined nickel fell 750 yuan/mt from the previous trading day. In terms of spot premiums, the average premium for Jinchuan #1 refined nickel was 1,350 yuan/mt, up 200 yuan/mt from the previous trading day; premiums for domestic mainstream brand electrodeposited nickel ranged from -500 to 400 yuan/mt.

Futures market:

The most-traded SHFE nickel 2607 contract continued to slide sharply during the session, dipping to 134,000 yuan/mt, and closed the morning session at 133,370 yuan/mt, down 1.49%.

US CPI came in higher than expected, bolstering rate hike expectations and pushing the world into a monetary tightening window; on the Indonesia side, the premium previously built up due to ore scarcity is being corrected; China's refined nickel inventory has hit a record high and continues to increase, visible inventory pressure has not been substantively eased, and nickel prices remain under pressure in the short term.