[SMM Nickel Midday Review] Nickel prices plunged on October 15, as hotter-than-expected US CPI fueled rate hike bets and pressured base metals

SMM, October 15 (Nickel):

Macro and market news:

(1) US September CPI came in hotter than expected, doubling rate hike bets. September CPI rose 3.7% YoY (vs. 3.6% expected, 3.4% prior), the fastest pace in five months. Core CPI rose 2.6% YoY and 0.3% MoM, both above expectations, with gasoline prices surging 9.1% MoM and contributing more than half of the increase. Traders sharply raised the probability of an October rate hike from 22% to above 50% (52.9% per CME), and the US dollar index hit an 18-month high. Bank of America expects the US Fed to hike rates three times before June 2027, while Citigroup expects a 25 bp hike in December.

(2) Divisions within the US Fed over the timing of rate hikes have become public. Goolsbee called the September inflation "disappointing" and said it would be "completely unacceptable" if core inflation remained at an annualized monthly pace of around 4%, requiring action. However, Governor Bowman and San Francisco Fed President Daly argued there is no need to rush a hike at the October 27-28 meeting and that the Fed can wait and see. The Fed's Beige Book showed all 12 districts cited oil price shocks, and half of the districts reported strong or intensifying price pressures.

(3) China: September imports and exports totaled 5.16 trillion yuan, topping 5 trillion yuan for the first time. In US dollar terms, exports rose 36.3% YoY, far exceeding expectations (integrated circuit exports +136%). September CPI rose 0.9% YoY and PPI rose 5.0% YoY, the highest in nearly four years (gasoline up 16.6% as the main driver). September aggregate financing reached 3.55 trillion yuan and new loans reached 1.08 trillion yuan, both beating expectations. The Indonesian Nickel Smelters Association (FINI) said that due to tight raw material supply and drought, Indonesia's nickel product production in 2026 is expected to decline by up to 4% YoY.

Spot market:
On October 15, SMM #1 refined nickel averaged 119,150 yuan/mt, down 1,400 yuan/mt from the previous trading day. In terms of spot premiums, Jinchuan #1 refined nickel averaged 4,300 yuan/mt, up 100 yuan/mt from the previous trading day, while mainstream domestic electrodeposited nickel brands ranged from -100 to 600 yuan/mt.

Futures market:
The most-traded SHFE nickel contract (2611) opened flat and shot up in early trading before plunging sharply. As of the end of the morning session, it closed at 116,810 yuan/mt, down 1.28%.

Short-term outlook:
The hotter-than-expected US September CPI has sharply increased the probability of a Q4 rate hike, sending precious metals and nonferrous metals broadly lower. Nickel's own pattern of high inventory and weak demand remains unchanged, and the weak trend persists. In the short term, the most-traded SHFE nickel contract is expected to trade in the range of 117,000-120,000 yuan/mt.