SMM Nickel Market Morning Comment (Aug 5)

Last week, SHFE nickel prices showed a trend of first rising and then falling. They increased from 126,240 yuan/mt on Monday to a peak of 133,960 yuan/mt during the week, before falling back to around 130,000 yuan/mt. Last week, nickel prices were significantly influenced by macro factors, generally rising from a week ago. In July, nickel prices overall showed a downward trend, once dropping to the lowest point since Q3 last year. Due to the decline in nickel prices, there was a risk of losses in related sectors. The renewed favourable macro front provided upward momentum for nickel prices. On the macro front, the US GDP data exceeded expectations, and Japan's interest rate hike also had an impact. After a continuous decline, macro sentiment rebounded. Additionally, last week, the US Fed monetary policy meeting announced that the target range for the federal funds rate would remain unchanged at 5.25% to 5.5%. The Fed hinted that if progress continues in fighting inflation, it might announce a rate cut at the September meeting this year. Fed Chairman Powell stated that if the relevant data meets expectations, the Fed might gradually cut rates by the end of the year, making the US July unemployment rate and non-farm payrolls data to be released last Friday particularly crucial. If the data falls short of expectations, it could impact nickel prices this week. On the fundamentals side, the rise in nickel prices last week led to weaker purchasing sentiment among downstream. However, traders were more active in receiving goods, mainly as spot premiums/discounts declined and some end-users conducted hedging operations. Due to the decline in nickel prices at the beginning of the week, the import window opened on Wednesday night, and some traders began purchasing overseas nickel plates from bonded areas. Overall, the favourable macro sentiment continued to ferment, and the supply-demand mismatch still existed, with weak downstream demand. However, recent macro factors had a greater impact on nickel prices. Therefore, it is expected that SHFE nickel prices will continue to fluctuate upward this week.