This week, nickel prices experienced a sharp sell-off triggered by a sudden reversal in macro sentiment and high inventory pressure from the fundamentals. At the start of the week, the market came under pressure amid expectations of a "hawkish" nomination for the new Fed Chairman. Panic sentiment peaked on February 2, with LME and SHFE nickel prices plunging simultaneously. LME nickel prices fell below the $17,000 mark during the week, while the most-traded SHFE nickel contract (2603) hit an 11% limit-down intraday, erasing gains from January driven by Indonesian policy expectations, and ended the week down more than 9%. In the spot market, the average price of SMM #1 refined nickel was 139,300 yuan/mt this week, down 10,350 yuan/mt WoW. The average premium for Jinchuan nickel was 9,500 yuan/mt, up 2,200 yuan/mt WoW. The premiums and discounts for mainstream domestic electrodeposited nickel brands remained stable in the range of -400-400 yuan/mt. Due to the sharp decline in nickel prices this week, end-users' willingness to restock at low prices increased, and market transactions improved significantly compared to last week. On the macro front, Trump nominated former governor Kevin Warsh, seen as a "hawkish" representative, as the next Fed Chairman this week. The market's widely expected "dovish" candidate did not materialize, leading to a reversal in expectations for future monetary policy. Warsh advocates lowering interest rates through "balance sheet reduction + interest rate cuts," which was interpreted by the market as a tightening of global liquidity, causing the US dollar index to strengthen significantly and putting pressure on precious and non-ferrous metal prices. In the short term, market sentiment will take time to recover, and with the Chinese New Year holiday approaching, capital remains cautious. However, the medium and long-term logic supporting nickel prices—expectations of tighter Indonesian nickel ore quota (RKAB) approvals—has not disappeared, and nickel prices are still expected to rebound. The most-traded SHFE nickel contract is forecast to trade in the range of 130,000-145,000 yuan/mt next week. Inventory side, Shanghai Bonded Zone inventory was about 2,200 mt this week, with a WoW buildup of 500 mt. Domestic social inventory was about 73,000 mt, with a WoW buildup of about 2,600 mt.

[SMM Stainless Steel Daily Review: Stainless Steel Demand Remains Sluggish During Off-Season, Low Prices Fail to Boost Transactions] SMM reported on June 16 that today, the SS futures market was weakened by the decline in SHFE nickel prices, falling below the 12,500 yuan/mt threshold. Against the backdrop of continuously declining stainless steel prices, market confidence was shaken, with downstream players generally adopting a cautious wait-and-see attitude, focusing on just-in-time procurement in small quantities. As a result, spot market transactions remained sluggish. Recently, prices of both high-grade NPI and high-carbon ferrochrome have shown a downward trend, leading to weak cost support for stainless steel. Currently in the traditional off-season, market confidence in a consumption recovery is generally low. Despite stainless steel prices having fallen to low levels, the price reductions have not effectively stimulated transactions. Traders are expecting stainless steel mills to cut production to gradually restore the current supply-demand imbalance in the market. In the futures market, the most-traded 2508 contract weakened and declined. At 10:30 a.m., SS2508 was quoted at 12,500 yuan/mt, down 60 yuan/mt from the previous trading day. In the Wuxi region, the spot premiums/discounts for 304/2B stainless steel ranged from 370-670 yuan/mt. In the spot market, cold-rolled 201/2B coils in both Wuxi and Foshan were quoted at 7,750 yuan/mt; cold-rolled trimmed 304/2B coils had an average price of 12,850 yuan/mt in Wuxi and the same in Foshan; cold-rolled 316L/2B coils were priced at 24,000 yuan/mt in Wuxi and the same in Foshan; hot-rolled 316L/NO.1 coils were quoted at 23,350 yuan/mt in both regions; cold-rolled 430/2B coils were priced at 7,500 yuan/mt in both Wuxi and Foshan. Currently, the stainless steel market...

This week, nickel prices showed a downward trend. In the spot market, the average price of SMM1# refined nickel fell from 123,900 yuan/mt at the beginning of the week to 121,500 yuan/mt, a decline of 1.9%. The premium for Jinchuan nickel remained in the range of 2,300-2,600 yuan/mt this week, showing no significant change compared to last week. Currently, downstream procurement is still mainly driven by immediate needs, with low enthusiasm for purchasing, resulting in generally average trading activity in the spot market. In the futures market, the most-traded SHFE nickel contract (NI2507) closed at 119,920 yuan/mt this week, down 1.82%, with prices once again falling below the key point of 120,000 yuan/mt. LME nickel prices fell more sharply than SHFE nickel prices this week, closing at $15,120/mt, down 2.39%. On the macro front, the US May non-farm payrolls data significantly exceeded expectations (with an increase of 272,000 jobs), coupled with the US Fed's June interest rate decision signaling a more "hawkish" stance, weakening expectations for US Fed interest rate cuts. The risk of escalating trade tariffs has intensified, with the US announcing the imposition of additional tariffs on steel home appliances (such as washing machines and refrigerators) starting from June 23, impacting nickel end-use demand in sectors like stainless steel and electroplating. The geopolitical conflict in the Middle East has sharply escalated, driving up crude oil and gold prices, prompting a shift towards safe-haven assets and accelerating the decline in nickel prices. In terms of inventory, the inventory in the Shanghai Bonded Zone was approximately 5,000 mt this week, unchanged WoW. Domestic social inventory was approximately 39,400 mt, with an inventory buildup of about 8 mt WoW, maintaining a stable inventory situation. This week, the nickel market broke below key levels under the dual impact of macroeconomic pressures and fundamental supply surpluses. In the absence of unexpected demand improvements or significant supply-side contractions, nickel prices are unlikely to break out of the current doldrums, with downside risks still present. It is expected that in the short term, the bottom of the nickel price range will be around 115,000 yuan, while the top will face pressure at 123,000 yuan.

During the night session last Friday, SHFE nickel prices rose rapidly, and this upward trend continued at the beginning of today's daytime session, with the most-traded contract surging over 2%. According to SMM, there has been much discussion in the market recently about the Philippines' ore export ban policy, with reports suggesting that "the Philippine government plans to implement a ban on nickel ore exports starting from June 2025." In fact, this issue had already sparked discussions earlier this year. On February 3, 2025, the Philippine Senate passed a bill banning nickel ore exports. Currently, the bill is under review by the bicameral conference committee and has not yet been signed into law. The subsequent review of the bill will take place after Congress reconvenes in June, at which point discussions will commence. (As of 9:09 on May 12, SHFE nickel market trends)

SMM Nickel News on April 29: Macro News: (1) The final value of the US one-year inflation rate expectation surged from 5.0% last month to 6.5% this month, the highest level since 1980, marking a significant increase of 0.5 percentage points or more in inflation expectations for four consecutive months. Long-term inflation expectations climbed from 4.1% in March to 4.4% in April. The immediate forecast for the core CPI inflation rate is 2.941%. Although this figure is lower than the core PCE inflation rate, it remains above the US Fed's long-term target. (2) Sources said that the European Central Bank's (ECB) policymakers are increasingly confident in cutting interest rates in June in response to the continued decline in inflation, but will not make a substantial cut. Last week, several ECB Governing Council members attended the International Monetary Fund (IMF) and World Bank Spring Meetings, discussing the potential deterioration of the eurozone and global economies due to US tariffs. Meanwhile, the latest economic data released in the eurozone also reflected this phenomenon. As for inflation, there is no indication that it has worsened due to tariffs for the time being. Spot Market: Today, the SMM 1# refined nickel price is 124,350-126,850 yuan/mt, with an average price of 125,600 yuan/mt, up 550 yuan/mt from the previous trading day. The quotation range for the mainstream spot premiums of Jinchuan No.1 nickel is 1,900-2,300 yuan/mt, with an average premium of 2,100 yuan/mt, down 150 yuan/mt from the previous trading day. The quotation range for the premiums and discounts of Russian nickel is 0-300 yuan/mt, with an average premium of 150 yuan/mt, unchanged from the previous trading day. Futures Market: The most-traded SHFE nickel contract (NI2506) edged up 0.16% to 124,890 yuan/mt during the night session, but was suppressed by macro sentiment during the day session, continuing to weaken intra-day. As of 11:30, the closing price was 124,130 yuan/mt, down approximately 0.4% from the settlement price of the previous trading day. Expectations for US Fed interest rate hikes in June have intensified, coupled with the rebound in US manufacturing data, putting pressure on LME nickel prices denominated in US dollars. Currently, nickel prices are influenced by a combination of multiple macro factors, including the Sino-US tariff game, policy adjustments in Indonesia, and tightening US dollar liquidity, with cost support and surplus pressure coexisting.

After a sharp decline on the first day after the holiday, SHFE nickel returned above 120,000 as shorts took profits and exited the market. Futures prices then steadily rebounded, gradually filling the previous gap. Indonesia has announced a new policy on nickel product royalties. What impact will this have on the nickel market? How should we view Indonesia's multiple policy adjustments this year? What is the current supply and demand situation for nickel? What factors in the fundamentals are worth paying attention to? After consecutive rebounds, does SHFE nickel still have room for further upside? Webstock Inc.'s [Institutional Diagnosis] section invites SHFE nickel futures experts to provide in-depth insights. [Institutional Diagnosis]: Indonesia has announced a new policy on nickel product royalties. What impact will this have on the nickel market? How should we view Indonesia's multiple policy adjustments this year? Gu Jing, Senior Analyst at Yide Futures Investment Consulting Department: The increase in tax rates for raw materials and smelting products directly raises production costs. Based on the HMA price of nickel at $15,534.62/mt in the second period of March 2025, the cost of nickel ore with a grade of 1.6%-2.0% will increase by $1.1-1.8/wmt. Assuming the rise in mining costs is fully passed on to smelting, coupled with the increase in smelting tax rates, the cost of NPI will rise by $420/mt (metal content), and the cost of nickel matte will increase by $411/mt (metal content). The cost of MHP using low-grade nickel ore remains unaffected. After nearly two years of surplus, nickel prices have been fluctuating at the bottom. As the world's largest supplier of nickel, Indonesia has recently introduced multiple policies aimed at helping nickel prices break out of the low valuation range, ensuring more rational use of nickel resources, and thereby increasing domestic tax revenue. Jiang Xinbin, Senior Metal Analyst at Zheshang Futures Research Center: Indonesia's nickel product royalty policy has recently been implemented. The core of this policy is to implement a progressive tax rate increase for products at various stages of the nickel industry chain. The new policy significantly raises the tax burden on nickel ore and its downstream products, directly lifting the cost center of the nickel industry chain and supporting nickel prices: based on the current HMA, the royalty for nickel ore has been increased from a fixed 10% to 14%, potentially driving NPI costs up by $180-200/mt. In 2025, Indonesia has frequently introduced policies, from the SIMBARA system and HMA price adjustments to the new royalty policy. Behind these moves is not only Indonesia's long-term strategy to enhance resource revenue and strengthen the voice of related industries but also a stopgap measure by the Indonesian government to cope with the huge costs of Prabowo's "flagship project." Xia Peng, Head of Nonferrous and New Energy Group at Chuangyuan Futures Research Institute: The Indonesian government's 2025 Government Regulation No. 19 is an update based on the 2022 Regulation No. 26, mainly increasing the cost of nickel ore usage, with the royalty levied only once during the industry chain process. The royalty rate for nickel ore with a grade below 1.5% remains at 2%, while the rate for ore above 1.5% has been increased from 10% to 14%-19% (with progressive increases based on different HMA nickel prices). The impact on nickel prices is mainly reflected in the upward shift in costs. As a resource-exporting country, the new Indonesian government, which took office last October, has adjusted its mineral policies primarily to alleviate fiscal pressure. [Institutional Diagnosis]: What is the current supply and demand situation for nickel? What factors in the fundamentals are worth paying attention to? Gu Jing, Senior Analyst at Yide Futures Investment Consulting Department: On the supply side, the rainy season in the main mining areas of the Philippines has ended, and ore output has seasonally rebounded, with a noticeable increase in ship departures, up YoY. The import of Philippine ore to Indonesia has significantly increased, easing the tight ore supply in the later period. Indonesian NPI smelting production remains high, while high-grade nickel matte production stays low due to tight high-grade ore supply, and MHP production remains high. Domestic refined nickel production also maintains a high schedule. On the demand side, the cumulative YoY decline in ternary power battery installations is significant, leading to reduced demand for high-grade nickel matte and MHP. The recent implementation of new battery standards has constrained end-use consumption, making it difficult to drive up intermediate product prices through downstream orders in the short term. In the stainless steel sector, both 200-series and 300-series production remain high, with nickel consumption maintaining a high growth rate of over 10%. However, stainless steel inventory pressure is expected to be significant in the later period. Overall, the nickel industry remains in a surplus. The recent implementation of Indonesia's tax policies has provided strong support for prices, and future attention should be paid to whether there will be any unexpected performance on the demand side. Jiang Xinbin, Senior Metal Analyst at Zheshang Futures Research Center: On the supply side, the hype around Indonesia's BNBP policy for nickel ore has subsided, and the imminent resumption of production by major nickel pig iron (NPI) producers continues to tighten supply in Indonesia, with high domestic trade premiums supporting ore prices. In terms of primary nickel, domestic smelters have low nickel ore inventories, and some companies are still in maintenance periods, keeping overall NPI production low. Indonesian NPI production remains high in April, and the pullback in nickel prices has driven the conversion of high-grade nickel matte back to NPI, likely extending the surplus. Recent MHP production cuts are expected to marginally tighten refined nickel supply. Overall, Indonesia's nickel supply remains relatively loose. On the demand side, stainless steel demand is recovering slowly, with a slow destocking pace, and traders are pessimistic about future orders, indicating a generally weak demand. Future supply-side attention should focus on the shipping pace of Philippine nickel ore and Indonesia's domestic nickel ore trade, while demand-side attention should be on stainless steel inventory and order dynamics. Xia Peng, Head of Nonferrous and New Energy Group at Chuangyuan Futures Research Institute: From a fundamental perspective, the current supply and demand situation in nickel smelting remains challenging. As of April 17, LME refined nickel inventory stood at 204,500 mt, the highest since September 2021. Last Friday, SMM reported domestic refined nickel social inventory at 43,300 mt, indicating no shortage of refined nickel, the trading target in the futures market. The main point of contention since the Chinese New Year has been the disruptions in Indonesian nickel ore supply. In 2024, Indonesia accounted for 60% of global primary nickel production, showing a high concentration. Moreover, MHP capacity in the smelting sector continues to expand, making nickel ore relatively scarce compared to smelting capacity. The anchor for futures pricing lies in the ore sector. Last year, the slow issuance of RKAB in Indonesia, combined with low smelter ore inventories, the rainy season, and the Indonesian Ramadan in March, created a short-term supply-demand mismatch, driving nickel ore prices and subsequently nickel prices slightly higher. As we approach May, seasonal recovery in nickel ore supply from Indonesia and the Philippines may slightly ease the tight ore supply, with a focus on nickel ore price changes. [Institutional Diagnosis]: After consecutive rebounds, does SHFE nickel still have room for further upside? Gu Jing, Senior Analyst at Yide Futures Investment Consulting Department: Currently, with the easing of macro sentiment, the LME market has fully recovered from the decline caused by reciprocal tariffs, and the market has already reacted to the adjustment of Indonesia's PNBP tax rates. The current surplus continues, with high inventory levels exerting downward pressure. We believe that further upside in the futures market will require further improvement in the supply and demand fundamentals. Jiang Xinbin, Senior Metal Analyst at Zheshang Futures Research Center: After the Qingming Festival, SHFE nickel prices rebounded from low levels, approaching the middle of the previous trading range. From a fundamental perspective, on the supply side, although the implementation of Indonesia's nickel product royalty policy has pushed the price center higher, the overall supply of primary nickel remains rigidly growing, with high inventory pressure for Class 1 nickel still present. On the demand side, stainless steel is significantly dragged down by weak end-use consumption in real estate and infrastructure, with cautious market procurement and pessimistic order expectations making it difficult to form strong support. Overall, the global nickel market remains in a supply-demand surplus, and SHFE nickel's upside room for continued rebound in the short term is limited, with sideways movement expected. Attention should be paid to changes in Indonesia's industrial policies and the macro environment. Xia Peng, Head of Nonferrous and New Energy Group at Chuangyuan Futures Research Institute: This year, we have been closely monitoring changes in Indonesia's mineral policies, particularly whether there will be adjustments to nickel ore quotas. Information from the Indonesian Nickel Association shows that the Indonesian government has allocated 298 million mt of nickel ore quotas for 2025, which is estimated to meet the nickel ore consumption for 2025 based on this year's smelting production. Global primary nickel supply and demand remain in surplus. However, since December last year, government officials have repeatedly stated in public that they plan to reduce this year's nickel ore quotas to stabilize nickel prices. If the quota is cut to 220 million mt as suggested by the Ministry of Energy and Mineral Resources officials at the end of February, the global primary nickel supply and demand will completely reverse this year, shifting from surplus to shortage. Over the past decade, the Indonesian government has adjusted its mineral policies multiple times, making it difficult to predict future policy directions. It is recommended to closely monitor changes in Indonesian nickel ore prices.

【4.7 Morning Meeting Minutes】Last week, nickel prices showed a fluctuating trend at lows after a sharp decline. The price of SMM #1 refined nickel fluctuated between 118,750 and 124,800 yuan/mt, while the SHFE nickel futures price (2505 contract) ranged from 115,450 to 121,850 yuan/mt. Macro-wise, the repeated changes in Sino-US tariff policies and disruptions in Indonesian nickel ore supply were the main factors affecting nickel prices.

Affected by Tariffs, SHFE Nickel Plunges Nearly 6%. On April 7, the most-traded SHFE nickel contract fell by 5.53% at 11:30 AM, with significant price fluctuations. The main reason for this decline was the escalation of Sino-US tariff policies, which heightened market concerns about a global economic recession. Additionally, the withdrawal of long investors further amplified market volatility.

【4.1 Morning Meeting Minutes】Current market transaction prices: For pyrometallurgical ore, the weekly price of SMM's Indonesia local ore at 1.6% is $51/wmt. For hydrometallurgical ore, the weekly price of SMM's Indonesia local ore at 1.2% is $26/wmt. Indonesia's pyrometallurgical nickel ore may see another price increase in April, with a premium of $23-25 currently under negotiation for April. The CIF price of hydrometallurgical ore may remain temporarily stable but fluctuate downward.

SMM Stainless Steel Spot Daily Review: Stainless Steel Spot Prices Rise While Futures Fall Amid Cost Support, with Mediocre Trading and Strong Downstream Wait-and-See Sentiment. On March 31, 2025, stainless steel spot prices increased due to cost support. Some steel mills raised their list prices, and spot merchants increased their quotations, but downstream buyers maintained a strong wait-and-see attitude, resulting in mediocre trading. On the futures side, the most-traded SS2505 contract fluctuated downward, with a quotation of 13,445 yuan/mt at 10:30 AM, down by 45 yuan/mt.