SMM Nickel October 21 News: Macro and Market News: (1) Foreign Ministry Spokesperson Guo Jiakun presided over a regular press conference yesterday. A reporter asked that China and the US will hold a new round of China-US economic and trade consultations, and US President Trump stated that the US has listed rare earths, fentanyl, and soybeans as the three major issues raised by the US towards China. In response, Guo Jiakun said that China's position on handling China-US economic and trade issues is consistent and clear. Tariff wars and trade wars are not in the interest of either side, and both sides should resolve any issues through consultations on the basis of equality, respect, and mutual benefit. (2) The National Bureau of Statistics (NBS) released data today showing that, based on preliminary calculations, the gross domestic product (GDP) for the first three quarters was 101.5036 trillion yuan, calculated at constant prices, up 5.2% YoY. By industry, the value added of the primary industry was 5,806.1 billion yuan, up 3.8% YoY; the value added of the secondary industry was 36,402 billion yuan, up 4.9% YoY; and the value added of the tertiary industry was 59,295.5 billion yuan, up 5.4% YoY. By quarter, GDP grew 5.4% YoY in Q1, 5.2% in Q2, and 4.8% in Q3. On a quarterly basis, GDP grew 1.1% in Q3. Spot Market: On October 21, the price of SMM #1 refined nickel was 121,100-123,900 yuan/mt, with an average price of 122,500 yuan/mt, up 400 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan #1 refined nickel was 2,400-2,500 yuan/mt, with an average premium of 2,450 yuan/mt, flat from the previous trading day. The spot premium/discount quotation range for mainstream domestic brands of electrodeposited nickel was -100-200 yuan/mt. Futures Market: The most-traded SHFE nickel contract (2511) fluctuated rangebound at high levels during the night session, closing slightly higher at the tail. On the 21st, the SHFE nickel early session opened at 121,270 yuan/mt (up 520 yuan), with the futures maintaining strong performance. Recent focus should be on US inflation data and US Fed policy signals, while progress in China-US trade talks will also impact the market. Against the backdrop of weak fundamentals and turbulent external conditions, nickel prices are expected to remain in the doldrums in the short term, with the reference range for the most-traded SHFE nickel contract at 120,000-124,000 yuan/mt.

Growing uncertainty surrounding the direction of tariffs and oil prices, as well as their impact on inflation, is heightening a risk ahead of tonight's US Fed decision: that Fed officials may not be able to cut interest rates twice this year as they had previously anticipated... The US Fed is set to announce its June interest rate decision at 2 a.m. Beijing time on Thursday, and it is easy to foresee that the "dot plot," which reflects Fed officials' expectations for interest rate policy changes this year, will clearly be the focus of many market participants at that time. In the previous dot plot released in March, the median expectation of Fed officials indicated two interest rate cuts before the end of this year. Meanwhile, federal funds rate futures traders currently believe there is only a 37.7% probability that the Fed will actually cut interest rates less than twice! And this clearly poses a significant risk to tonight's market: if the June dot plot reflects only one interest rate cut expected this year, will investors who are "full of anticipation" for two cuts be greatly disappointed? Matthew Ryan, head of market strategy at financial services firm Ebury, said in an email on Monday that the company believes two interest rate cuts this year will still be the baseline expectation for most Fed policymakers. Given the significant uncertainty surrounding current tariffs, they may not have enough confidence to substantially change their views. However, there is also a risk that a minority of officials believe the number of interest rate cuts this year will be fewer than previously expected, which could be enough to tilt the decision-making balance toward only one cut (25 basis points) in 2025." He added, "A hawkish dot plot, combined with Powell's remarks emphasizing no rush to cut interest rates, could provide some room for the US dollar to strengthen in the second half of this week." Over the past three months, Fed officials have consistently expected the inflation rate and core inflation rate for 2025 (based on their preferred inflation indicator, the PCE price index) to reach 2.7% and 2.8%, respectively, before gradually declining to the target level of 2% in 2027 and beyond. Since December last year, they have also "held steady" for three consecutive policy meetings, maintaining the federal funds rate target between 4.25% and 4.5%. Currently, traders generally expect Fed policymakers to implement the first interest rate cut of 2025 in September. In fact, the risk factors that have made the Fed reluctant to cut interest rates sooner have been present and continue to accumulate recently. US President Trump announced a 10% base tariff on most imported goods on April 2, and during the 90-day suspension period for reciprocal tariffs he set (which will expire in July), there is still a lack of a permanent solution to this trade war, exacerbating the uncertainty surrounding the inflation outlook. Additionally, the conflict between Israel and Iran that erupted late last week has continued into its fifth day, exacerbating oil price volatility and sparking concerns that supply disruptions could trigger a new wave of inflation. Greg Faranello, head of US rates trading and strategy at New York-based AmeriVet Securities, said market participants would react on Wednesday to "the dot plot and how it correlates with the US Fed's inflation forecast." Faranello noted that if the Fed's latest dot plot projects only one interest rate cut in 2025, this could be perceived as "more hawkish" and might lead to an increase in short-term interest rates, such as the 2-year US Treasury yield. This could present a buying opportunity for some investors. Faranello wrote that Treasury yields have been experiencing sideways movement for about two months, with participants in the interest rate market stating, "We don't know what's going to happen next." Faranello also mentioned that the Fed might not cut interest rates at all this year. Faranello believes that traders may not focus too much on the Fed's updated interest rate projections for 2026 and 2027 compared to the expectations for this year's rate path on the dot plot, given the significant uncertainties surrounding the inflation outlook. Moreover, they may react more cautiously to Fed Chairman Powell's press conference, as the Fed Chairman's term is set to end next year, and Trump will be seeking a successor. "The overall trajectory of interest rates will definitely be lower—that's for sure. The question is how quickly we get there," the strategist added.

On Tuesday, silver prices in London surged significantly, breaking through the $37 per ounce mark with a gain of over 2%. This also marked the fifth consecutive trading day in which silver prices diverged from gold prices. Historical data shows that over the past half-century, silver and gold prices have moved in the same direction on 78.9% of trading days. UBS analysts pointed out that despite the recent gold-to-silver and gold-to-platinum price ratios being favorable for silver and platinum prices to rise, it is difficult to determine whether market participants are truly engaging in catch-up trading. Currently, the gold-to-silver ratio has fallen to 91, slightly above the ten-week low of 90.5 reached last Tuesday, but well below the level above 100 seen in April when Trump announced the trade war. Theoretically, when the gold-to-silver price ratio is too high, the market will start to push up silver prices to narrow the price spread between the two metals. Gold's Logic Remains Unchanged One point that surprised investors was that amid the ongoing Middle East conflict, gold prices fell on Tuesday, retreating from $3,400 per ounce to around $3,390. Meanwhile, due to concerns that the Strait of Hormuz shipping lane could be blocked due to the conflict, Brent crude oil prices soared above $78 per barrel on Tuesday, reaching the highest level since late January and more than 30% above the four-year lows seen in April and May. The movement of gold prices is clearly opposite to that of most safe-haven assets. However, UBS believes that gold's current consolidation is setting the stage for the next round of gains, as bullish sentiment towards gold remains unchanged. Nicky Shiels, a strategist at MKS PAMP, a Swiss gold bar refining and financial group, added that gold is still expected to reach a high of $3,500, as the outbreak of conflict between Israel and Iran could be a catalyst for nuclear war or an even larger conflict. Industrial metals, particularly overbought ones like platinum, may face stress tests as traditional safe-haven assets will remain more popular. Carsten Menke, head of research at Julius Baer Group in Switzerland, also told the media that considering the potential consequences of the conflict and the typical timidity of short-term traders in the market, gold's reaction may seem surprising at first glance. However, he emphasized that a closer look reveals that this aligns with the historical pattern where geopolitical shocks do not sustainably push up gold prices. Notably, many analysts are waiting for the US response to the conflict between Iran and Israel. As US President Trump left the G7 summit early and expressed a reluctance to mediate the conflict, the market is concerned that the US may further support Israel. Amid these concerns, silver prices broke through on Tuesday.

[SMM Analysis: Cost Support for Silicone Declines, but Operating Rates Expected to Remain High] According to SMM, the mainstream transaction prices of domestic DMC fell to around 10,700 yuan/mt this week. Monomer enterprises in east China quoted prices at 10,500 yuan/mt this week, a decrease of 800 yuan/mt WoW. The low market price approached the 10,000 yuan/mt threshold. However, under the current cost support, monomer enterprises' willingness to lower prices has slightly decreased.

As trade tensions eased, US consumer confidence improved for the first time in six months, and pessimism over soaring underlying inflation also significantly abated. Data released by the University of Michigan on Friday showed that the preliminary consumer confidence index for June stood at 60.5, up 16% MoM and higher than the expected 54. This marked the first increase in consumer confidence since December last year. Joanne Hsu, director of the University of Michigan's Surveys of Consumers, said that consumers appeared to have recovered to some extent from the shock of the extremely high tariffs announced in April and the policy fluctuations that followed in subsequent weeks. However, consumers still believe that the economy faces broad downside risks. Nevertheless, consumer confidence remains about 20% lower than it was in December last year, and Americans could become nervous again if trade conflicts flare up anew. In addition, all five index components rose, with particularly large increases in short- and long-term expectations for business conditions, consistent with the perception that tariff pressures have eased somewhat. Their views on business conditions, personal finances, purchasing conditions for big-ticket items, the labour market, and the stock market are all significantly lower than they were in December 2024, six months ago. Despite the notable improvement in the economy this month, consumers remain cautious and worried about the economic trajectory. So far, the Trump administration has made little progress in trade negotiations, and with reciprocal tariffs set to be re-imposed on July 8, Trump has less than a month to consult with over a hundred trading partners. Notably, Trump's tariff plans have also encountered obstacles at home. Previously, the US Court of International Trade suspended almost all tariffs targeting specific countries on the grounds that Trump had overstepped his authority. However, the US Court of Appeals for the Federal Circuit later granted the Trump administration's request to temporarily stay the trade court's ruling that prohibited the enforcement of multiple tariff executive orders issued by the US government. The trade war initiated by Trump has influenced Americans' attitudes toward the economy, raising questions about what it means for consumer spending, the lifeblood of the US economy. Consumer sentiment has notably weakened, but in recent years, it has not been a reliable indicator for predicting future consumer spending. Data released simultaneously showed that the US one-year inflation rate expectation fell to 5.1% this month from 6.6% last month, and long-term inflation expectations declined for the second consecutive month, dropping to 4.1% from 4.2% in May. Both indices are at their lowest levels in three months. Hsu pointed out that consumers' concerns about the potential impact of tariffs on future inflation eased in June. Despite this, inflation expectations remain higher than the levels in the second half (H2) of 2024, reflecting widespread belief that trade policies may still lead to higher inflation in the coming year. Data released by the US Department of Labor this week showed that consumer prices rose 0.1% in May from the previous month, a smaller increase than market expectations, and concerns that tariffs implemented by Trump would start to drive up prices did not materialize. However, economists generally still expect tariffs to push up prices in the coming months. Mild inflation data has led Trump and other White House officials to once again call on the US Fed to cut interest rates. Trump wrote on Truth Social, "Great inflation numbers! The Fed should cut interest rates by a full percentage point."

On June 13, at the 2025 SMM (13th) Minor Metal Industry Conference - Rare and Scattered Metals Forum (Indium, Germanium, Gallium, Bismuth, Selenium, Tellurium), hosted by Shandong Humon Smelting Co., Ltd. and SMM Information & Technology Co., Ltd., Long Wensheng, General Manager of Changsha Aochang Nonferrous Metals Co., Ltd., elaborated on "The Current Application Status and Future Prospects of Minor Metal Selenium.