SMM Nickel Market Morning Comment (May 20)

Nickel prices rose sharply last Friday. During the night session on May 16, nickel prices broke through 150,000 yuan/mt and reached a peak of 154,690 yuan/mt on May 17, finally closing at 153,460 yuan/mt, up 4.67% compared with the last trading day and approximately 6.01% WoW, which was primarily contributed to the slow RKAB approval. The outbreak of the New Caledonia incident last week fuelled nickel prices higher. External macro sentiment continued to favor the non-ferrous metals sector. Last Wednesday night, the US announced that April CPI rose 3.4% YoY, with both MoM and YoY growth lower than that in March. The market believed that the data retained the possibility of a US Fed rate cut in September. News on last Thursday reported the outbreak of the New Caledonia incident, affecting the normal operations of local production companies. Supply was disrupted at an Australian mine due to cost and other factors. Affected by multiple events simultaneously, nickel prices fluctuated upward. Fundamentally, the Indonesian government has not updated the nickel ore quota approval status for two months. However, according to SMM, some quotas have been approved in Indonesia, but are far from meeting the 2024 capacity demand for refined nickel and secondary nickel. Additionally, nickel ores from New Caledonia and Australia cannot be supplied normally. Therefore, prices rose across various products in the nickel industry chain. Demand side, stainless steel demand continued to weaken in Q2, while in the new energy sector, although demand from end users increased, their raw material inventories stayed high, providing limited support for raw material demand. It is expected that SHFE nickel will run between 145,000-155,000 yuan/mt this week.