[SMM Nickel Midday Review] Nickel prices rebound on October 19 as bears cover positions, Waller's remarks lean dovish but oil prices hit five-month high

SMM nickel, October 19:

Macro and market news:

(1) Fed Chairman Warsh's speech in Washington was dovish, and October rate hike expectations plunged. Warsh explicitly stated at the IMF-World Bank annual meetings that he would "not prejudge the outcome of the meeting" and would abandon the forward guidance strategy. The market's probability of a rate hike at the October 27-28 meeting dropped sharply from about 27% to below 15%. Goldman Sachs expects the Fed to hold rates steady in October and deliver the next hike in December. The US dollar index fell 0.21% to 101.84, a two-week low, while the 10-year US Treasury yield stood at 5.098% (US Treasuries posted their best weekly performance since February).

(2) Oil prices surged to a five-month high. Ukraine resumed attacks on Russian refineries, and bipartisan US lawmakers proposed a bill to block the US-Russia diesel supply agreement. WTI rose 2.97% to $98.94/bbl, and Brent rose 3.39% to $107.58, a five-month high. The US plans to provide up to 17 million barrels of strategic petroleum reserve crude, and the IEA is accelerating the release of 100 million barrels from reserves.

(3) China: The State Council executive meeting deployed measures to deepen and expand the "AI+" initiative and approved in principle the draft amendment to the Price Law. The Ministry of Commerce and the Ministry of Science and Technology plan to impose export controls on 40 technologies in three sectors: AI, biomedicine, and PV. A-shares saw a volume surge in late Friday trading, with broad-based ETFs showing signs of bottom support. Indonesian stocks plunged 11.57% on Friday, the largest drop since 1998 (MSCI raised concerns about investability).

Spot market:

On October 19, the average price of SMM #1 refined nickel was 119,200 yuan/mt, up 1,750 yuan/mt from the previous trading day. In terms of spot premiums, the average premium for Jinchuan #1 refined nickel was 4,650 yuan/mt, down 100 yuan/mt from the previous trading day, while 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 flat and shot up in early trading before falling sharply. As of the morning close, it was reported at 116,810 yuan/mt, down 1.28%.

Short-term outlook:

After Warsh's speech, rate hike expectations eased, and macro pressure moderated somewhat. A large-scale unwinding of SHFE nickel bear positions drove a rebound, but the market still lacks active bullish positioning, so the sustainability and height of the rebound warrant caution. In the short term, the most-traded SHFE nickel contract is expected to trade in a range of 115,000-112,000 yuan/mt.