[SMM Nickel Midday Review] Nickel prices rebounded on reduced positions on September 10, with uncertainty over this week's US CPI data still unresolved

SMM Nickel, September 10:

Macro and market news:

(1) US-Iran mutual strikes escalated, with Brent crude breaking through the $100 mark. After the US military announced the destruction of five Iranian oil tankers, Iran's Revolutionary Guard struck a US military base in Jordan and attacked two US warships and eight oil tankers; Iran announced the establishment of a new maritime "sanctions zone" and released ceasefire conditions. Overnight, WTI surged 3.91% to $96.67/barrel, and Brent crude broke above $100 for the first time since July. Trump said, "As soon as the midterm elections are over, the Iran war will end immediately, and oil prices will plummet."

(2) Global rate hike expectations hit suddenly, with European and US stock markets falling across the board. CME showed a 60.2% probability of a US Fed rate hike in September, and UBS raised its expectations for US Fed rate hikes this year to two; the market widely expects the European Central Bank to hike rates by 25 basis points to 2.50% today, and the swap market is pricing in cumulative ECB rate hikes of about 90 basis points by the end of 2027 (the highest of this tightening cycle). Overnight, the Dow fell 0.77% to a more than one-month low, and the Euro Stoxx 600 dropped 1.41%, its biggest decline in two months.

(3) The US Treasury's "market rescue card" landed: today it will buy back up to $6 billion of 10-20 year Treasury bonds, three times the previous size but still below market expectations of $7-8 billion. After the announcement, US Treasury yields rose instead of falling; "New Bond King" Gundlach warned that if the US Fed holds steady next week, long-term bond selling will intensify. Tonight's US August PPI and tomorrow night's August CPI are the last two inflation readings before the September 15-16 policy meeting.

(4) China's August inflation data recovered: CPI rose 0.8% YoY (expanding by 0.3 percentage points), core CPI rebounded to 1%, and PPI YoY growth widened to 3.8%. LME copper hit record highs for three consecutive days (touching $14,858.5/mt intraday), and New York copper also set new highs; meanwhile, LME nickel futures edged up only 0.04% to $16,875/mt, continuing to significantly underperform the sector. Today, hot-rolled coil and stainless steel options were listed on the SHFE.

Spot market:
On September 10, the average price of SMM #1 refined nickel was 129,300 yuan/mt, up 1,450 yuan/mt from the previous trading day. In terms of spot premiums, the average for Jinchuan #1 refined nickel was 2,300 yuan/mt, up 150 yuan/mt from the previous trading day, while mainstream domestic electrodeposited nickel brands ranged from -100 to 500 yuan/mt.

Futures market:
The most-traded SHFE nickel contract (2610) strengthened in early trading, closing the morning session at 128,450 yuan/mt, up 0.84%.

Short-term outlook:
Copper prices hitting consecutive record highs reinforced inflation trading, and SHFE nickel followed the sector's rebound in early trading. However, the rising global rate hike wave is suppressing risk appetite, and nickel's own high inventory and weak demand pattern remains unchanged, casting doubt on the sustainability of the rebound. Market sentiment is cautious ahead of tomorrow night's US August CPI release. In the short term, the most-traded SHFE nickel contract is expected to trade in the range of 126,000-130,000 yuan/mt.