[SMM Nickel Morning Meeting Summary] US Fed's Williams releases dovish signals, most-traded SHFE nickel contract swings wildly in daytime session

10.15 Morning Meeting Minutes

Market hot topics:

According to SMM, on October 14, Indonesian nickel ore prices were generally stable. Limonite ore Ni 1.2%: $25.5/wmt, unchanged. Limonite ore Ni 1.3%: $27.5/wmt, unchanged. Saprolite ore Ni 1.4%: $48.7/wmt, unchanged. Saprolite ore Ni 1.5%: $54.2/wmt, unchanged. Saprolite ore Ni 1.6%: $59.0/wmt, unchanged.

Macro:

(1) Fed "No. 3" Williams sent a dovish signal, and expectations for the end of the rate hike cycle strengthened. New York Fed President Williams (permanent voting member) said one more rate hike this year is appropriate, but there is no need to hike in 2027. This is the Fed's first clear signal that "only one final rate hike remains in 2026." After his remarks, the US dollar and Treasury yields pulled back. The 10-year Treasury yield fell 1.6 bp to 5.221%, and the US dollar index retreated from an 18-month high, falling 0.37% to 102.20. However, internal divisions remain (Goolsbee and Barkin lean hawkish). US September CPI will be released at 20:30 tonight, the last inflation data before the October 27-28 FOMC meeting, and will be a key deciding factor.

(2) Middle East conflict continues, and oil prices remain firm. Twenty-four ships were attacked in the Strait of Hormuz over the past two weeks. Saudi Aramco's headquarters building in Dhahran was hit by Houthi fire and caught fire. Israeli media reported that Netanyahu discussed with Trump a large-scale joint strike on Iran before the election. US Central Command said the Strait of Hormuz is controlled by US forces and regional partners, and that more than 19 million barrels of crude oil were assisted in being shipped out the previous day. WTI rose 1.61% to $93.88/barrel, and Brent rose 0.44% to $104.77.

(3) China: September CPI, PPI, and trade data will be released today. The central bank approved Visa to prepare for a bank card clearing institution.

Spot market:

On October 14, SMM #1 refined nickel averaged 120,550 yuan/mt, up 100 yuan/mt from the previous trading day. In terms of spot premiums, Jinchuan #1 refined nickel averaged 4,200 yuan/mt, down 50 yuan/mt from the previous trading day. The range for mainstream domestic electrodeposited nickel brands was -100 to 600 yuan/mt.

Futures market:

The most-traded SHFE nickel contract (2611) swung wildly during the daytime session, closing at 118,320 yuan/mt, down 0.14%.

Short-term outlook:

Williams' dovish signal pulled back the US dollar and Treasury yields and strengthened expectations for the end of the rate hike cycle, but market sentiment is cautious ahead of tonight's US September CPI release, and position-building momentum is weak. Nickel's own high inventory and weak demand pattern remains unchanged. If tonight's CPI is mild, dovish expectations will be realized, supporting a rebound; if it exceeds expectations, it will return to pressure. In the short term, the most-traded SHFE nickel contract is expected to trade in the range of 118,000-121,000 yuan/mt.

Nickel Sulphate

On October 14, SMM battery-grade nickel sulphate average prices declined.

Cost side, nickel prices remained under dual pressure from macro factors and fundamentals, and immediate production costs for nickel sulphate slipped; supply side, some producers held relatively high inventory levels and sought production cuts to destock, but as the nickel sulphate-SHFE nickel price spread continued to widen, production schedules at refined nickel conversion and recycling enterprises are expected to see limited downside; demand side, some downstream enterprises still relied mainly on long-term contract supply, sentiment for building spot order inventories was subdued, and acceptance of nickel salt prices was relatively low. Today, the Willingness to Sell Sentiment Factor for upstream nickel salt smelters stood at 2.1, the procurement sentiment factor for downstream precursor plants at 2.0, and the sentiment factor for integrated enterprises at 2.2 (historical data can be queried in the database).

Looking ahead, spot order market activity is expected to remain subdued in the short term, and nickel sulphate prices are under overall pressure.

NPI

October 14 news: SMM's high-grade NPI market sentiment factor stood at 1.73, down 0.05 MoM; the upstream sentiment factor for high-grade NPI was 1.80, down 0.05 MoM; and the downstream sentiment factor for high-grade NPI was 1.66, down 0.05 MoM. Bearish sentiment in the NPI market has further intensified. Downstream stainless steel finished products are not circulating smoothly, social inventory pressure remains elevated, steel scrap cost-effectiveness has improved, and steel mills have proactively reduced NPI purchases, with procurement expectations continuing to be revised downward. The market price center has kept shifting lower, bottom expectations across market participants have been repeatedly lowered, and most players believe prices still have downside. Overall transactions were sluggish and market confidence was insufficient. In the short term, stainless steel demand is unlikely to recover quickly, and NPI may remain in a weak bottom-seeking pattern; continued attention is needed on actual procurement implementation by steel mills.

Stainless Steel

  According to SMM on October 14, SS futures are currently consolidating on a subdued note. Nonferrous metals futures weakened overall, with SHFE nickel and SS falling in tandem. By the close, the most-traded SS contract settled at 13,470 yuan/mt. In the spot market, dragged by the successive weakness in SS futures, spot trading confidence was insufficient. Post-holiday restocking demand has largely been released, and overall transactions weakened. With raw materials also weakening in tandem, stainless steel mill profits have recovered somewhat, cost support has continued to diminish, and with demand remaining persistently weak, the market generally lacks confidence in the outlook.

  SS most-traded futures contract. At 10:15 a.m., SS2611 was quoted at 13,505 yuan/mt, up 70 yuan/mt from the previous trading day. Spot premiums for 304/2B in Wuxi were around 515 yuan/mt. In the spot market, the average price of cold-rolled 201/2B coils in Wuxi was flat; for cold-rolled 304/2B coils with uncut edges, the average price in Wuxi fell 25 yuan/mt and the average price in Foshan fell 25 yuan/mt; cold-rolled 316L/2B coil prices in Wuxi were flat; hot-rolled 316L/NO.1 coil quotes in Wuxi were flat; and cold-rolled 430/2B coils in both Wuxi and Foshan were flat.

  Before the holiday, the stainless steel market showed a consolidating pattern characterized by external weakness and domestic stability, a falsified peak season, and a balance between longs and shorts. Expectations for a traditional "September-October peak season" recovery completely fell through, end-use demand remained persistently weak, and downstream stockpiling largely wound down ahead of the long holiday, leaving only sporadic need-based transactions. Overall trading was sluggish, and the demand side continued to weigh on spot prices. Futures moved independently and resisted declines, not following deeply lower despite weakness in nonferrous metals and SHFE nickel, with strong support from low valuations, while spot prices remained firm overall. The cost side continued to improve, with upstream nickel-series and chromium-series raw material prices pulling back, and the price spread between finished products and raw materials repaired, reversing the earlier persistent losses and gradually restoring production profits at steel mills. On the supply side, expectations for production cuts continued to build, marginal industry supply contracted, and with market prices at yearly lows, downside was effectively limited. Inventories shifted from decline to increase, ending the earlier pace of continued destocking. Affected by sluggish end-user offtake and increased market arrivals, social inventory accumulated again, and supply pressure in the industry rebounded somewhat. Overall, weak demand and inventory buildup created bearish factors, while low valuations, production cuts providing a floor, and profit recovery offered support. The tug-of-war between longs and shorts was balanced, and the market consolidated at lows. After the holiday, the stainless steel market is likely to continue moving sideways within a range under a weak supply-demand tug-of-war, with a low probability of a one-sided rise or fall. The demand side remains the core constraint. Expectations for a peak-season recovery have been falsified, end-use demand is generally weak, and post-holiday work and production resumptions will proceed gradually, making a concentrated restocking-driven rally unlikely, with the pace of need-based demand release remaining slow. The supply and cost sides will continue to provide bottom support, as steel mill production cuts are steadily implemented, supply pressure eases marginally, and the decline in raw material prices slows, alongside improving mill profitability. On inventories, the long-holiday production halt caused demand to stall, so short-term inventory buildup pressure will persist after the holiday and continue to cap any rebound. Overall, after the holiday, stainless steel upside will be constrained by demand and inventories, while downside will be supported by costs, production cuts, and low valuations, making it difficult to rise or fall significantly. Going forward, close attention should be paid to the pace of end-user work resumptions and restocking, the implementation of steel mill production cuts, raw material price fluctuations, and the progress of inventory destocking.

Nickel ore:

Philippine market:

In terms of prices, on October 14, Philippine nickel ore prices fell across all grades, with mainstream CIF China prices showing relatively notable declines: 1.3% Ni CIF China: down $2/wmt, 1.4% Ni CIF China: down $2/wmt, 1.5% Ni CIF China: down $2/wmt, 1.8% Ni CIF China: down $2/wmt. This broad price reduction further signals a weakening Philippine nickel ore market, consistent with the recent decline in Indonesian nickel ore prices and a more cautious buying side. CIF Indonesia prices fell to $40/wmt for 1.3% Ni and $50/wmt for 1.4% Ni. Philippine mine FOB prices are expected to be lowered further by about $2/wmt. Downstream raw material inventory in China is currently relatively sufficient, estimated to last about 2 months, with spot purchases mainly driven by rigid demand. Meanwhile, ocean freight rates from the Philippines to China remain at elevated levels, raising the landed cost of imported ore and limiting the actual purchasing appeal of Philippine ore in the CIF China market even if FOB prices are reduced.

Weather-wise, major nickel ore producing areas in the Philippines have recently been affected by the ITCZ and seasonal rainfall, with rain and thunderstorms reported in parts of Palawan, Visayas, and Mindanao. Zambales has been notably impacted by the rainy season, with mining, transportation, and vessel loading at some mines restricted, reducing actual shipping capacity. Supply contraction has gradually become the main factor influencing the local market. By contrast, areas such as Palawan still retain some shipment capability, so overall supply has not yet seen a full-scale shortage.

In terms of supply-demand and market sentiment, the decline in Zambales supply has not yet translated into notable price support, mainly because downstream inventory in China is relatively sufficient and higher shipping costs have curbed purchase willingness for imported ore. At the same time, weaker local nickel ore prices in Indonesia have further reduced the competitiveness of Philippine ore entering the Indonesian market. If prices for Indonesian 1.3–1.4% ore continue to fall, Philippine mines may need to further adjust FOB quotes to sustain transactions. In the short term, the Philippine market remains soft, with attention focused on the recovery of Zambales shipments, Palawan shipment conditions, and changes in ocean freight rates on the China route.

Indonesia market:

Price-wise, Indonesian nickel ore prices were generally weak this week. CIF Indonesia main port prices for Ni 1.2%, 1.3%, 1.4%, 1.5%, and 1.6% nickel ore stood at $26.5/wmt, $28.5/wmt, $51.8/wmt, $58.5/wmt, and $63.4/wmt, respectively. Among them, 1.2% limonite ore fell by $0.5/wmt from the previous period, while other grades remained steady for now. As additional RKAB quotas gradually enter the market and the new HPM is expected to be lowered by about $2/wmt, mine-side quotes remain under pressure.

Supply side, the supplementary 2026 RKAB quotas are being gradually released, and market attention has shifted from quota approvals to actual production and shipments. New quotas will not immediately translate into spot supply, as mines still need to complete production preparations involving equipment, roads, inventory, and logistics. However, if more mines return to normal production, actual supply in Q4 still has room to increase.

Demand side, smelter raw material inventory is currently relatively sufficient, estimated to last about 2 months, so restocking momentum is limited in the short term, and spot purchases are mainly aimed at meeting production needs. Supply of Ni 1.3–1.4% ore is relatively ample, while high-grade ore is relatively tight, and the supply-demand divergence between grades remains pronounced.

Regarding El Niño and water resources, Indonesia is currently facing persistently dry conditions and water shortages, rather than the heavy rainfall impacts seen in the Philippines. Industrial water pressure has increased in nickel industry concentration areas such as Morowali, and has already begun to affect operations at some smelting facilities. SMM survey shows that some RKEF production lines have seen operating rates drop to approximately 30–40% of normal levels since September 22, but this is not yet a full-scale production cut across the entire industrial park. The impact of water shortages on the nickel ore market is mainly reflected on the demand side. After RKEF production lines reduce loads, nickel ore consumption at affected lines will decline accordingly, and spot procurement demand at some smelters may also decrease. Given that current inventories are already relatively sufficient, if water restrictions persist for an extended period, actual ore demand from the smelting side could weaken further than previously expected, thereby increasing downward pressure on ore prices.

On the policy and market front, the gradual release of RKAB, the expected downward adjustment of the new HPM, and sufficient smelter inventories are collectively capping near-term ore price upside. Meanwhile, water constraints caused by El Niño are gradually transmitting from production condition issues to actual nickel ore demand. If some RKEF lines continue operating at low loads, supply increases and demand reductions could act on the spot market simultaneously.

Looking ahead, Indonesia's nickel ore market is expected to remain weak in the near term, with key focus on the pace at which newly released RKAB translates into actual production and shipments, the final magnitude of the new HPM adjustment, and smelter inventory drawdown. On the water resources front, continued monitoring is needed for operating rates at affected RKEF lines in Morowali and their actual impact on ore procurement volumes.