SMM Nickel, July 3:
Macro and Market News:
(1) US nonfarm payrolls increased by 57,000 in June, below market expectations of a 110,000 rise. Payroll gains for April and May were revised down by a combined 74,000.
(2) On Friday, the US dollar was on track to post its biggest weekly decline in nearly three months, as the sharp slowdown in US job growth in June prompted traders to scale back expectations for near-term US Fed interest rate hikes. The market now sees a 52% chance of a rate hike at the September meeting, down from 64% in the previous session.
Spot Market:
On July 3, SMM #1 refined nickel price rose 1,800 yuan/mt from the previous trading day. In terms of spot premiums, the average premium for Jinchuan #1 refined nickel was 2,250 yuan/mt, up 100 yuan/mt from the previous trading day, while the range for domestic mainstream brand electrodeposited nickel was -400 to 400 yuan/mt.
Futures Market:
The most-traded SHFE nickel 2609 contract surged to the 128,000 yuan level in early trading before pulling back slightly, and ended the morning session at 127,190 yuan/mt, up 0.59%.
The surprisingly weak US nonfarm payrolls report prompted more cautious views on the job market outlook, significantly cooling expectations for US Fed interest rate hikes. The sharp decline in the dollar provided a catalyst for a rebound in nickel prices. In the short term, nickel prices are expected to remain in the doldrums within the range of 125,000-135,000 yuan/mt.
