[SMM Analysis] Frequently Shifting Rate Hike Expectations Cause Nickel Prices to Swing Wildly

Published: Sep 4, 2026 17:18

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This week, nickel prices showed a "hit bottom—rebound—pull back again" wild swing pattern, with the weekly operating center slightly lower. The probability of a US Fed rate hike in September rose to 66.9%, and the global bond sell-off pressured risk assets. SHFE nickel dipped to a weekly low closing of 126,910 yuan/mt. On Thursday, the surprisingly weak US August ADP employment data marginally cooled rate hike bets. Overnight LME nickel surged 1.38% against the trend, and SHFE nickel opened and moved higher. This week's weekly decline was about 0.4%, and the LME nickel 3M contract weakened in tandem, down about 0.4%. In the spot market, the average price of SMM #1 refined nickel this week was 128,460 yuan/mt, down 1,450 yuan/mt WoW. Jinchuan refined nickel premiums continued to widen during the week, gradually rising from 1,500 yuan/mt to 1,650 yuan/mt. Mainstream electrodeposited nickel premiums were quoted in the range of -200 to 500 yuan/mt. The decline in futures stimulated some downstream pricing interest, and trading activity recovered slightly.

On the macro front, expectations for a US Fed rate hike in September "heated up first, then cooled down" this week, driving repeated swings in market sentiment. Early in the week, Fed Governor Warsh said inflation had not improved, and rate hike expectations rose. By Wednesday, the market-implied probability of a September rate hike had risen to 66.9%, compounded by a global bond sell-off and a stronger US dollar, putting risk assets broadly under pressure. The situation reversed from Thursday: the surprisingly weak US August ADP employment data marginally cooled rate hike bets. On Friday, Fed Governor Waller made dovish remarks, further pulling back September rate hike expectations, with both the US dollar and US Treasury yields moving lower.

On the inventory front, Shanghai Bonded Zone inventory this week was about 1,400 mt, flat WoW. China's social inventory was about 129,000 mt, destocking by about 1,200 mt WoW.

Currently, nickel prices are supported below by electrodeposited nickel production costs and pressured above by high inventories. The most-traded SHFE nickel 2610 contract is expected to trade in a core range of 127,000-131,000 yuan/mt next week.

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