SMM

Last week, SHFE nickel prices generally rose before falling back, with the highest price breaking through 160,000 yuan/mt, and then closing at 152,780 yuan/mt last Friday. Overall, nickel prices ran strong, mainly driven by positive macro sentiment and also affected by the updated progress of Indonesian RKAB approval under market expectations, with disclosed figures matching SMM's research. The RKAB approval progress reduced market expectations of a continued halt in nickel ore approvals in June, easing concerns about future nickel ore supply. However, the updated data is relatively low and represents quotas for three years rather than one year, which means that the total approved RKAB quotas in January-May will not be fully digested by the Indonesian market this year. Therefore, short-term expectations of tight nickel ore supply cannot be dispelled, supporting nickel prices. However, with the expectation of increased nickel ore supply in the future, the forecast of overcapacity for various nickel products in H2 remains unchanged. Thus, the future rise in nickel prices will face resistance from fundamentals. From a macro perspective, Iranian President Raisi was killed in a helicopter crash at the beginning of the week, leading to a general rise in non-ferrous metals sector amid the current turbulence in the Middle East. US inflation in April ended the three months of rebound, April retail data weakened, and non-farm payrolls fell since May, further strengthening market expectations of a Fed interest rate cut this year. After the latest Fed meeting clarified that rate cuts would be delayed, the market's biggest concern about interest rate hikes was dismissed. Meanwhile, gradual monetary easing started, also contributing to the rise in non-ferrous metal prices. Overall, the downside room for nickel prices is limited due to strong macro support.