【SMM Analysis】Driven by cost support and the recovery of macro sentiment, nickel prices stabilized and rebounded this week, but the supply-demand pattern remained unchanged.

Nickel prices rebounded strongly this week, with the weekly average price of SMM #1 refined nickel at 126,215 yuan/mt, up 3.6% WoW. For the most-traded SHFE nickel contract, the implementation of Indonesia's nickel ore royalty (PNBP) policy, the recovery of market sentiment, and the cost support effect drove nickel prices to gradually rebound. As of April 18, the closing price was 125,600 yuan/mt, with a cumulative increase of 3.5% during the week.

In terms of supply, refined nickel production in March was approximately 34,000 mt, up 21% MoM, still showing a supply surplus. Demand side, domestic stainless steel mills' nickel ore inventory remained at low levels, and profits continued to decline. Some production lines were under maintenance, and steel mills' low willingness to schedule production kept overall output at a low level. Downstream nickel sulphate stockpiling intentions were high in April, and precursor plants actively inquired about prices. However, the demand support for nickel sulphate was limited due to the substitution of ternary batteries by LFP. Alloy demand remained resilient, but overall growth was limited.

Inventory side, domestic social inventory this week was approximately 44,000 mt, with a buildup of about 650 mt WoW. Inventory remained at a high level, suppressing the upside room for nickel prices to some extent.

SHFE nickel is expected to maintain a fluctuating upward trend next week, but the upside space will be constrained by high inventory and weak demand.