[SMM Nickel Midday Review] Nickel prices bottomed out on October 16, as US Treasury yields and the US dollar retreated from highs

SMM Nickel October 16 News:

Macro and Market News:

(1) US September PPI ran hot, with inflationary pressure spreading. September PPI rose 1.3% MoM, the largest gain in more than four years (more than double the expected 0.6%), and rose 6.3% YoY, the highest since December 2022, driven mainly by a 20% surge in gasoline prices. Excluding food, energy, and trade, core PPI still rose 0.5%, indicating inflation is spreading to broader sectors. Retail sales beat expectations. Traders still see a 91% probability of at least one rate hike before December.

(2) Risk-off sentiment reversed, with US Treasuries and the US dollar retreating from highs. Credit risk concerns around AI companies (CoreWeave, etc.) heated up, tech stocks remained under pressure, and funds poured into Treasuries for safety. The 10-year Treasury yield plunged more than 10 bps intraday, falling for a third straight session to test 5.04% (the lowest since September 23). The US dollar index posted its biggest drop in more than a month (-0.3%), erasing gains driven by CPI. The probability of an October rate hike fell back to 29%. Market focus shifted from "inflation" to "the impact of high rates on growth and corporate debt servicing."

(3) Fed Chairman Warsh speaks tonight at the IMF-World Bank Annual Meetings in Bangkok, marking the last opportunity to signal rate intentions before the blackout period ahead of the October FOMC meeting begins on Saturday. Before the September hike, Warsh had sent hawkish signals to guide the market, and with inflation surprising to the upside this time, his remarks are drawing close attention.

Spot Market:
On October 16, SMM #1 refined nickel averaged 117,450 yuan/mt, down 1,700 yuan/mt from the previous trading day. In terms of spot premiums, Jinchuan #1 refined nickel averaged 4,750 yuan/mt, up 450 yuan/mt from the previous trading day. Mainstream domestic brands of electrodeposited nickel were quoted in a range of 0-600 yuan/mt.

Futures Market:
The most-traded SHFE nickel contract (2611) opened lower in early trading, dipped, then rebounded. As of the morning close, it reported 115,790 yuan/mt, down 0.10%, with open interest decreasing by about 3,400 lots.

Short-Term Outlook:
US Treasuries and the US dollar retreated from highs, marginally easing macro pressure. SHFE nickel opened lower and rebounded in early trading, but nickel's own pattern of high inventory and weak demand remains unchanged. The rebound is still driven by short covering, lacking active buying from bulls. Tonight's speech by Warsh is a key variable—if he remains dovish, sentiment may recover; if he turns hawkish, pressure may return. In the short term, the most-traded SHFE nickel contract is expected to trade in a range of 114,000-120,000 yuan/mt.