Nickel Prices Sideways Amid Macro Pressures and Inventory Buildup

Nickel prices were generally in the doldrums this week. The most-traded SHFE nickel contract moved sideways within the 142,000-147,000 yuan/mt range, pulling back after attempting to test resistance at overhead moving averages. The main bearish factors came from continued inventory buildup, which suppressed bullish sentiment. Wait-and-see sentiment was prevalent in the market, with no clear unidirectional driver. LME nickel prices were similarly in the doldrums within the $18,300-19,000/mt range. Spot market side, the weekly average price of SMM #1 refined nickel was 143,510 yuan/mt, up 350 yuan/mt WoW. Jinchuan nickel premiums remained at 1,000-1,400 yuan/mt this week. Domestic mainstream electrodeposited nickel premiums stayed in the -500-500 yuan/mt range, with no significant change from last week. Spot market transactions returned to a sluggish state this week, mainly because end-users had actively stockpiled during the previous sharp decline in nickel prices. With futures moving sideways this week, downstream willingness to price against futures was low, with just-in-time procurement being the dominant mode.

On the macro front, Fed Chairman transition was completed this week, with new Chairman Waller officially taking office. Market expectations for US Fed interest rate cuts were pushed back to H2 2027, with the possibility of rate hikes not ruled out. Meanwhile, the 10-year US Treasury yield remained in the elevated range of approximately 4.35%-4.45% this week, and the US dollar index stayed strong, continuing to weigh on non-ferrous commodity prices.

Inventory side, Shanghai Bonded Zone inventory was approximately 1,700 mt this week, flat WoW. Domestic social inventory was approximately 113,000 mt, with an inventory buildup of approximately 1,100 mt WoW.

Currently, bullish and bearish forces are balanced, with continued refined nickel inventory buildup being the core factor suppressing nickel prices. In the short term, absent new catalysts, nickel prices are expected to continue moving sideways with wild swings within the 140,000-150,000 yuan/mt range.