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.

[SMM Shanghai Spot Copper] Looking ahead to next week, spot copper discounts are expected to continue narrowing slightly. Copper prices rose during the session, but the Contango price spread between nearby futures contracts widened slightly. Suppliers showed a strong willingness to hold prices firm, driving spot discounts to narrow marginally. Available supplies in the Changzhou area remained persistently tight, which may support local spot prices. However, as month-end approaches, market trading is turning sluggish, with downstream purchases driven mainly by rigid demand and limited willingness to chase higher prices, and overall transactions are expected to be just balanced. Overall, under the combined effects of suppliers holding prices firm and sluggish month-end trading, Shanghai spot copper prices against the SHFE copper 2606 contract are expected to remain at a discount, with the discount likely to move sideways.

SMM Nickel News, May 29: Macro and Market News: (1) The US core PCE price index annual rate further rose to 3.3% in April, the highest level since November 2023, in line with market expectations. (2) Zimbabwe announced that 14 minerals including lithium and nickel were designated as "critical minerals," with mandatory state equity participation. Spot Market: On May 29, SMM #1 refined nickel prices rose 1,100 yuan/mt from the previous trading day. Spot premiums: Jinchuan #1 refined nickel averaged 700 yuan/mt, down 50 yuan/mt from the previous trading day, while mainstream domestic electrodeposited nickel brands ranged from -700 to 100 yuan/mt. Futures Market: The most-traded SHFE nickel 2607 contract surged and then pulled back during the morning session, closing at 143,670 yuan/mt, up 0.09%. In the short term, nickel prices are expected to remain supported by costs on the downside while capped by inventory buildup on the upside, with the most-traded SHFE nickel contract's reference range at 137,000-145,000 yuan/mt.

SMM Nickel News, May 28: Macro and market news: (1) On May 27 local time, Boroujerdi, a member of Iran's National Security Council, stated that according to the preliminary agreement draft reached between Iran and the US, the US will commit in the first phase to a comprehensive 60-day ceasefire on all fronts, particularly within Lebanon. (2) China's State Administration for Market Regulation deployed local market regulatory departments to carry out a special campaign on credit empowerment to address involution-style competition, May-December. Spot market: On May 28, SMM #1 refined nickel prices fell 2,250 yuan/mt from the previous trading day. In terms of spot premiums, Jinchuan #1 refined nickel averaged 750 yuan/mt, down 350 yuan/mt from the previous trading day, while premiums for mainstream domestic electrodeposited nickel brands ranged from -1,000 to 100 yuan/mt. Futures market: The most-traded SHFE nickel 2607 contract saw prices plunge lower in the morning session, closing at 143,020 yuan/mt, down 0.92%. The current Middle East situation alternated between "ceasefire agreement — violation of agreement — peace talk expectations," intensifying nickel price fluctuations. Nickel prices are currently supported by cost floors below and suppressed by inventory buildup above. The most-traded SHFE nickel contract is expected to trade within the range of 137,000-145,000 yuan/mt in the short term.

[SMM Shanghai Spot Copper] Looking ahead to tomorrow, copper prices edged down during the day, activating some downstream buying interest. According to SMM, orders at some processing enterprises in east China improved compared to yesterday, with end-users mostly placing orders at around 103,600 yuan/mt. Available supplies in Changzhou became relatively tight, which may provide some support for local spot prices. In terms of market structure, the inter-month Contango price spread between futures contracts narrowed slightly, weakening suppliers' willingness to ship to delivery warehouses. The marginal increase in spot circulation pressure pushed discounts to widen further. Overall, amid the interplay of narrowing price spreads between futures contracts pressuring discounts, limited marginal improvement in demand, and tight regional supplies, spot prices against the SHFE copper 2606 contract are expected to remain at a discount tomorrow, continuing to stay under pressure.

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.

SMM Nickel News, May 27: Macro and market news: (1) Data from the NBS showed that from January to April, profits of above-designated-size raw material manufacturing industries were up 88.1% YoY, accelerating by 10.2 percentage points from January-March, boosting profits of all above-designated-size industrial enterprises by 10.3 percentage points. (2) Iran: The US and European economies are highly dependent on energy prices and vulnerable to changes in regional situations. This pressure leverage puts the US in a "requesting" position when it comes to reaching a deal with Iran. Spot market: 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 premiums for mainstream domestic electrodeposited nickel brands ranged at -500-500 yuan/mt. Futures market: The most-traded SHFE nickel 2606 contract opened higher and continued to rise, rebounding notably from the previous day, closing at 144,690 yuan/mt in the morning session, up 1.91%. Minor clashes between the US and Iran resumed, and uncertainties persist over the Strait of Hormuz, driving a rebound in nickel prices. The current Middle East situation alternates between "ceasefire agreements — violations — peace talk expectations," intensifying nickel price fluctuations. Nickel prices are currently supported by costs on the downside while capped by inventory buildup on the upside. The most-traded SHFE nickel contract is expected to trade within the range of 137,000-145,000 yuan/mt in the short term.

[SMM Shanghai Spot Copper] Looking ahead to tomorrow, copper prices remain at a relatively high level, downstream demand is weak, and the market is dominated by just-in-time procurement. Trading sentiment has pulled back slightly for consecutive days, and market transactions are sluggish. In terms of market structure, the inter-month Contango price spread between futures contracts remains around 150 yuan/mt, suppliers show a strong willingness to hold open interest for delivery, and a tendency to hold prices firm has emerged. During the day, some suppliers offered standard-quality copper with cargoes with invoices dated this month at a discount of 120 yuan/mt. Overall, Shanghai spot copper prices against the SHFE copper 2606 contract are expected to remain at a discount tomorrow, but downside room is limited.

[SMM Shanghai Spot Copper] Outlook for tomorrow: during the day, copper prices edged down, activating some buying interest, but downstream enterprises overall still focused on just-in-time procurement, with limited willingness to chase higher prices. In terms of invoice structure, the price spread between cargoes with invoices dated this month and cargoes with invoices dated next month remained around 40 yuan, and the periodic shortage of invoices continued. Overall, spot prices against the SHFE copper 2606 contract are expected to remain at a discount tomorrow, potentially widening slightly.

SMM Nickel News, May 26: Macro and market news: (1) A draft agreement between the US and Iran was reportedly reached, allowing free and open passage through the Strait of Hormuz and the clearing of mines; navigation through the Strait of Hormuz is to be restored within 30 days. (2) Iran's Ministry of Foreign Affairs: No transit fees will be imposed on the Strait of Hormuz. Charging for services provided is normal, but it should not be regarded as a toll. Spot market: On May 26, SMM #1 refined nickel prices fell 2,600 yuan/mt from the previous trading day. Spot premiums: Jinchuan #1 refined nickel averaged 1,100 yuan/mt, down 50 yuan/mt from the previous trading day, while mainstream domestic electrodeposited nickel brands ranged from -400-500 yuan/mt. Futures market: The most-traded SHFE nickel 2606 contract plunged sharply in the morning session, closing at 142,280 yuan/mt, down 1.08%. The Strait of Hormuz is about to reopen, and the sulfur supply deficit is expected to ease. The fading of geopolitical risk premiums weakened the short-term cost-side support for nickel prices, leading to a sharp decline. Currently, global refined nickel visible inventory remains at elevated levels, and sluggish downstream consumption has slowed the destocking process. Nickel prices lack upward momentum, and the most-traded SHFE nickel contract is expected to trade in the range of 137,000-145,000 yuan/mt in the short term.