Market Review and Outlook During the Mid-Autumn Festival: The Fluctuating Trend of Nickel Prices [SMM Analysis]

During the Mid-Autumn Festival, nickel prices exhibited a fluctuating trend. Opening at a relatively low point, they fluctuated upward and eventually dropped back slightly. The overall fluctuating range was between $15,855/mt and $16,355/mt.

From a macro perspective, market sentiment was mixed. The US Fed's rate cut expectations were gradually fermenting in trading. The annual rate of the US CPI in August declined compared to the previous value, increasing market expectations of a cooling US economy. Persistently weak manufacturing data further dragged down US Treasury yields, with the 10-year yield touching a low of 3.60%, the lowest since June 2023.

In Europe, Germany's continued economic slump exerted considerable pressure on the Eurozone. The ECB significantly cut rates again in September, lowering the benchmark rate by 25 basis points and the main refinancing rate by 60 basis points. Although the ECB maintained that inflation in 2024 would be higher than expected, the decision to narrow the rate corridor indicated that economic activity was under pressure.

Domestically, China's CPI in August rebounded slightly compared to the previous value. However, pessimistic expectations for Q3 GDP growth posed challenges to the current deleveraging and defoaming policies.

From a fundamental perspective, market focus remained on the mining end. The slow progress of Indonesia's RKAB approvals, coupled with a slight increase in prices of Indonesian domestic trade laterite nickel ore, kept concerns about nickel ore supply alive. Nevertheless, the tightness in Indonesian nickel ore supply has eased compared to earlier, limiting the upward price space.

In other sectors, nickel sulphate prices continued to decline due to weak demand; the continuous production and volume increase of intermediates exacerbated the oversupply of nickel elements; NPI shifted from shortage to gradual inventory accumulation, with prices falling below the cost line again; the "September peak season" for stainless steel and new energy demand did not materialize, and market expectations for the "October peak season" were also pessimistic. Overall, the trend of refined nickel inventory accumulation remained unchanged, and with the continuous increase in refined nickel production, the expectation of further inventory accumulation intensified.

In summary, although the macroeconomic boost led to a slight rebound in nickel prices, the overall fundamental support for prices remained limited. Additionally, there were still market expectations for the September RKAB approval update, which might pressure nickel ore prices and lead to further cost reductions. Therefore, SMM believes that the upward pressure on nickel prices remains, with further downward space.

We can see that although macroeconomic indicators and policy changes have had some impact on nickel prices, the fundamental situation remains the key factor determining its future trend. We hope the market can gradually emerge from the gloom with the support of more positive news.