[1.29 Nickel Morning Meeting Minutes]
Last week, the Shanghai nickel market showed a strong trend of low and strong levels, and successfully broke through the 130,000 yuan per tonne mark on Friday. Market sentiment was boosted by a series of positive macro news, with Shanghai nickel prices boosted significantly. During the week, foreign media first reported the news that the Kambalda mine in Western Australia will be closed due to the long-term depressed nickel price, and according to SMM research, the mine is one of BHP's nickel raw material suppliers. Meanwhile, Canadian mining giant First Quantum's Ravensthorpe nickel-cobalt mine in Western Australia also announced the cessation of operations, which could affect the company's feedstock supply in the second quarter of this year. In addition, the delay in the approval of the RKAB for nickel mines in Indonesia has also supported nickel prices. On the macroeconomic front, the market focused on the US core PCE price index for December this week, and the GDP report showed that US inflation has declined. The data revealed that the U.S. economy grew strongly, with a year-on-year increase of 3.3% in the fourth quarter of 2023. Meanwhile, initial jobless claims in the U.S. rose to 214,000 last week, indicating signs of weakness in the current job market. While the market remains cautious about the Fed's possible rate cut in March, the Fed is widely expected to start cutting rates in the first half of this year, given the faster-than-expected economic growth and easing inflationary pressures. In terms of fundamentals, nickel inventories showed a trend of accumulation last week, and SMM learned that nickel beans accounted for a large proportion of new inventories, mainly due to the arrival of a large number of nickel beans, and the high price of nickel led to the suppression of downstream stocking sentiment. In terms of production, while the rise in nickel prices has led to the recovery of pure nickel production profits, some refined nickel producers that may have previously reduced production still maintain high operating rates this week, and with the investment of some new production capacity, the supply of pure nickel is expected to be relatively loose. On the demand side, as the Spring Festival holiday approaches, the downstream gradually enters a holiday state, the pace of procurement slows down, and the activity of the overall spot market decreases. On the whole, although nickel prices are on a volatile upward trend in the short term due to the impact of mineral production cuts and macro interest rate cut expectations, the upside is limited by the pattern of supply and demand mismatch of pure nickel fundamentals. At present, the Shanghai nickel market is full of emotions between long and short, and it shows a certain strength before the holiday.
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