SMM Nickel Market Morning Comment (May 13)

Nickel prices fluctuated last week. Early last week, nickel prices fell along with the non-ferrous metals market. On May 10, SHFE nickel prices dropped to 144,760 yuan/mt. After the Labour Day holiday, international geopolitical conflicts did not escalate further. However, the core issue continued. There was no new progress in Indonesian nickel ore approval in May. The tight nickel ore supply lingered for three months, gradually affecting the smelting activity. The previously weak nickel fundamentals began to support industrial prices. From a macro perspective, the US Federal Reserve Board announced on May 1 that it would maintain the target range for the federal funds rate at 5.25% to 5.5%, in line with market expectations. This is the sixth consecutive time the Fed has kept interest rates unchanged since September 2023. Market analysts believe that it suggests delayed interest rate cuts amid current high inflation. Fundamentally, China's refined nickel output was 24,700 mt in April, down 1% MoM. However, output is expected to increase in May as production may resume. Demand side, the refined nickel transactions were bleak last week. Downstream postponed purchases amid high nickel prices, waiting for lower prices. The domestic electro-deposited nickel supply plunged due to increased nickel plate exports amid decent export profits. Refined nickel prices were still affected by macro environment and fundamentals. SHFE nickel prices are expected to be 138,000-146,000 yuan/mt this week.