Nickel prices consolidated at lows and hit bottom this week. Early in the week, expectations for further US Fed interest rate hikes and a stronger US dollar weighed on the most-traded SHFE nickel contract, keeping it under pressure around 124,000 yuan/mt. Mid-week, US June non-farm payrolls data significantly missed expectations, triggering a sharp reversal in macro sentiment. Rate hike expectations cooled abruptly, the US dollar index pulled back quickly, and nickel prices rebounded slightly, leaving the weekly decline at 1.2%. The LME nickel 3M contract also traded under pressure this week, breaching the $17,000 level and falling nearly 2% WoW. In the spot market, SMM #1 refined nickel averaged 127,080 yuan/mt this week, down 4,500 yuan/mt WoW. Jinchuan nickel premiums trended higher this week, climbing to around 2,200 yuan/mt, while mainstream electrodeposited nickel discounts held steady in the 400-400 yuan/mt range. On spot transactions, the sustained drop in nickel prices encouraged bargain-hunting by end-users, but after some downstream players had already stockpiled during the earlier price decline, overall weekly trading activity was moderate. On the macro front, US Labor Department data on July 3 showed that non-farm payrolls increased by only 57,000 in June, roughly half the 113,000 expected and well below the downwardly revised 129,000 for May. The sharper-than-expected cooling in non-farm payrolls data prompted a more cautious assessment of the employment outlook and led investors to re-evaluate the Fed’s monetary policy path. Rate hike expectations cooled markedly, the US dollar index fell to a two-week low, and the US Treasury yield curve steepened steadily. Inventory side, bonded zone inventory in Shanghai stood at around 2,700 mt, flat WoW. China’s social inventory stood at approximately 130,000 mt, a WoW buildup of about 1,100 mt. Nickel prices are currently caught between macro disruptions and weak industry fundamentals. In the short term, recovering macro sentiment supports a rebound, but the upside is still capped by high inventory pressure. The most-traded SHFE nickel contract is expected to trade in a core range of 125,000-135,000 yuan/mt next week.

SMM Nickel, June 22: Macro and Market News: (1) Last Sunday’s US-Iran-Switzerland talks lasted only 1.5 hours before being suspended — Trump threatened “heavier strikes” during the negotiations, the Iranian delegation walked out in protest, Iran has announced the closure of the Strait of Hormuz, the US has threatened to “take over the waterway,” and geopolitical risks in the Middle East have surged. (2) On June 18, Pan Gongsheng, Governor of the People’s Bank of China, met with Purba Yudi Sadwa, Minister of Finance of Indonesia. Spot Market: On June 22, SMM #1 refined nickel prices fell by 2,350 yuan/mt from the previous trading day. In terms of spot premiums, the average premium for Jinchuan #1 refined nickel was 1,400 yuan/mt, flat from the previous trading day, and mainstream domestic brand electrodeposited nickel premiums ranged from -600 to 400 yuan/mt. Futures Market: The most-traded SHFE nickel contract (2607) opened sharply lower in the morning session and then rebounded strongly, closing the morning session at 135,110 yuan/mt, down 0.84%. The sudden cancellation of US-Iran peace talks has heightened geopolitical uncertainty. LME nickel remained weak during the Dragon Boat Festival holiday, and SHFE nickel opened with a sharp plunge. In the short term, nickel prices are expected to trade in the doldrums in the range of 133,000-140,000 yuan/mt.

Nickel prices showed a pattern of stopping falling and stabilizing with a fluctuating rebound this week. At the start of the week, the US-Iran peace agreement became the key variable reversing market sentiment; as the geopolitical risk premium rapidly faded, market risk appetite recovered significantly. Meanwhile, the US Fed kept rates unchanged at its June FOMC meeting, in line with market expectations. Driven by the macro sentiment recovery, SHFE and LME nickel prices rose from earlier lows amid fluctuations. The most-traded SHFE nickel contract rebounded from the 135,000 yuan/mt area to near 137,000 yuan/mt, and LME nickel rallied in tandem to above $17,900/mt. This week, the SMM #1 refined nickel average price was 136,112 yuan/mt, up 450 yuan/mt WoW. Jinchuan nickel premiums stabilized at 1,300–1,500 yuan/mt, while mainstream electrodeposited nickel discounts were in the -500 to -400 yuan/mt range. Spot trading activity weakened from the previous week, as the futures price rebound and the completion of purchasing by most end-users left downstream parties largely on the sidelines. On the macro front, the most positive change this week came from the breakthrough in US-Iran relations. The US and Iran reached a peace agreement, and the Strait of Hormuz is expected to fully resume navigation in the near term, a geopolitical positive that boosted risk appetite. Some media outlets reported that the agreement would be officially signed on June 19, after which the Strait of Hormuz would fully reopen. On June 18 Beijing time, the US Fed kept the benchmark interest rate unchanged at 3.50%–3.75%, marking the fourth consecutive pause in rate cuts. The Fed held its FOMC meeting on June 16-17, and the market had previously priced in a 98.5% probability of an unchanged rate. However, the hawkish signals from this meeting cannot be ignored. The new chair, Warsh, leaned hawkish, and the dot plot showed that half of officials expected at least one rate hike this year. Inventory side, Shanghai Bonded Zone inventory was around 2,700 mt this week, building up by 1,000 mt WoW. China’s social inventory stood at about 126,000 mt, with a slight destocking of roughly 86 mt WoW. Following the US-Iran agreement, expectations of sulfur supply recovery intensified, weakening the cost-support logic. With refined nickel inventories continuing to build up both in and outside China, upside resistance for nickel prices is clear. The most-traded SHFE nickel contract is expected to trade in a core range of 130,000–138,000 yuan/mt.

SMM Nickel, June 12: Macro and Market News: (1) Hours after Trump announced he would bomb Iran again, Trump stated that, given the consultation results with Iran have been approved by Iran’s top leadership, the strike on Iran tonight is canceled. The US-Iran agreement has entered the finalization stage and is expected to be signed in Europe this weekend. (2) The European Central Bank raised its three key interest rates by 25 basis points as expected, marking the first hike in nearly three years. ECB President Lagarde stated that today’s decision is not an aggressive move, and the 25-basis-point hike serves as a signal. Spot Market: On June 12, SMM #1 refined nickel price rose by 900 yuan/mt from the previous trading day. Regarding spot premiums, Jinchuan #1 refined nickel averaged 1,750 yuan/mt, up 400 yuan/mt from the previous trading day, while domestic mainstream brand electrodeposited nickel premiums ranged from -500 to 400 yuan/mt. Futures Market: The most-traded SHFE nickel 2607 contract rebounded in early trading, closing the morning session at 135,370 yuan/mt, up 0.94%. US CPI exceeded expectations, fueling rate hike expectations, and the world entered a monetary tightening window. On the Indonesia side, the premium accumulated earlier due to ore scarcity is being corrected. China’s refined nickel inventory has reached a historic high, and domestic inventory continues to increase. Visible inventory pressure has not been fundamentally alleviated, and nickel prices are under pressure in the short term.

Nickel prices overall moved sideways this week with a slight pullback. Early in the week, driven by rising expectations for US Fed interest rate hikes and repeated geopolitical tensions over the Strait of Hormuz, the most-traded SHFE nickel contract briefly fell below 141,000 yuan/mt. However, from mid-week onward, strong supply-side support logic helped nickel prices stabilize above 142,000 yuan/mt, after which they moved sideways, with a weekly decline of 0.26%. Spot market side, the average SMM #1 refined nickel price was 143,700 yuan/mt this week, down 150 yuan/mt WoW. Jinchuan nickel premiums dropped significantly this week, with the range falling to 600-1,000 yuan/mt. Domestic mainstream electrodeposited nickel premiums were affected by contract rollover, with the range falling to -700-100 yuan/mt. Spot market transactions were mediocre this week, with downstream buyers only making just-in-time procurement and consumption remaining mediocre. On the macro front, Kevin Warsh was officially sworn in as Fed Chairman, while facing two major challenges — surging US Treasury yields and rising US inflation expectations. Market expectations for interest rate cuts continued to be pushed back, and expectations for interest rate hikes further strengthened. The US April PCE price index rose 3.8% YoY, hitting a three-year high, with the core index accelerating to 3.3% YoY. The US dollar index fluctuated at highs, continuing to weigh on non-ferrous metal prices. Geopolitical tensions remained stagnant this week. Iranian officials stated that the Iran-US "memorandum of understanding" text had not been finalized and Iran had not agreed to any memorandum of understanding. Should tensions ease, expectations for a recovery in sulfur supply would exert short-term pressure on nickel prices; on the other hand, a continued stalemate would mean sulfur cost support remains intact, providing a floor for nickel prices. Inventory side, Shanghai Bonded Zone inventory was approximately 1,700 mt this week, flat WoW. China's social inventory was approximately 117,000 mt, an inventory buildup of approximately 4,200 mt WoW. Currently, nickel prices are in a prolonged tug-of-war between bulls and bears. High inventory continues to suppress nickel price elasticity, serving as the core resistance constraining price upside. The most-traded SHFE nickel contract is expected to trade in a core range of 138,000-148,000 yuan/mt next week.

On May 27, SMM #1 refined nickel prices rose 3,100 yuan/mt from the previous trading day. Spot premiums: Jinchuan #1 refined nickel averaged 1,100 yuan/mt, flat from the previous trading day, while mainstream domestic electrodeposited nickel premiums ranged from -500 to 500 yuan/mt.