Nickel Prices Under Short-term Pressure Amid Fundamental Challenges, Focusing on US Fed Policy Movements [SMM Analysis]

This week, nickel prices rebounded from the bottom; however, the market outlook remained complex. With the guidance of the US macroeconomic forecast in September, especially the intensified discussions around the US Fed's interest rate cuts, investors' views on the future were filled with uncertainty. Although the possibility of rate cuts has significantly increased, the specific extent remains unclear, which brought some volatility to the market.

In the refined nickel market, there is currently an oversupply situation, and with weakened export expectations, domestic nickel inventories might continue to increase in the future. This supply pressure will undoubtedly exert sustained pressure on nickel prices. Although the demand for nickel in the electric vehicles market is still increasing, the severe global economic situation and pessimistic market sentiment may have a certain negative impact on demand. The sluggish stainless steel market also drags down nickel prices.

As the world's major nickel ore producer, Indonesia's policy changes have a considerable impact on the entire nickel market. Recently, Indonesia's nickel ore market has been under pressure, with September reference price down 5.38% from the previous month, further reflecting the weak state of the nickel ore market. This phenomenon will undoubtedly exacerbate concerns about the supply-demand imbalance.

The instability of the global macroeconomic environment is also a significant factor influencing nickel prices. The US Fed's interest rate hike policy and potential risks of an economic recession in Europe and the United States may indirectly affect nickel prices. In this context, market participants need to remain vigilant and be ready to respond to potential market fluctuations.

Considering the current situation, SMM believes that nickel prices may continue to be under pressure in the short term. Multiple impacts of oversupply, weakening demand, and external unfavourable factors limit the upside potential of nickel prices. However, market sentiment could reverse at any time, especially with the upcoming US Fed meeting, which will be a key event determining the future trend of nickel prices.