Summary of SMM Nickel Morning Meeting on July 31, 2023

SHFE 2308 nickel contract opened at 169,210 yuan/mt at the night session on July 28, and closed at 171,910 yuan/mt, down 1,730 yuan/mt. Trading volume fell by 62,891 lots, and open interest decreased by 13,636 lots.

On the macro level, last week the Fed announced that it would raise interest rates in July, in line with market expectations. What deserves attention is Powell‘s speech stating that interest rates will not be cut within this year. Affected by this, SHFE nickel fell slightly on July 27. However, the domestic Politburo meeting last week pointed out that it will expand domestic demand and stimulate economic growth and other macro-good news, which boosted SHFE nickel afterwards.

In terms of fundamentals, the spot premium continued to decline last week, and the Jinchuan nickel premium plunged by about 44.9%, mainly due to the loose supply of the Jinchuan nickel plate and the customs clearance of Norilsk nickel last week. On the demand side, the production schedule of 300 series stainless steel declined last week, and the demand for pure nickel was limited. In terms of alloys, the civil-use orders of some alloy enterprises declined last week, but the military nuclear power sector remained stable, supporting the consumption of pure nickel.

Overall, the demand for pure nickel was weak, leading to oversupply last week. This week, we need to pay attention to the interest rate decision of the Bank of England and the seasonally adjusted non-farm employment data of the United States in July. On the supply side, it is expected that the supply of pure nickel this week will be ample, mainly because domestic pure nickel production will continue to climb in August. On the demand side, in terms of alloys, some alloy factories will conduct centralized procurement at the beginning of the month, which will support the demand for pure nickel at the beginning of August. On the electroplating side, due to the continuous fall in orders, affected by the environmental protection policies and high temperature, some factories have chosen to reduce or stop production, and there is limited support for the demand for pure nickel.