Nickel futures on the Shanghai Futures Exchange experienced a range-bound decline in afternoon trading today. The main July 2024 contract opened at 129,340 yuan per tonne, reaching an intraday high of 130,390 yuan and a low of 127,220 yuan, before closing at 130,140 yuan. This represents a drop of 1,040 yuan, or 0.79%. Trading volume for the main July contract reached 193,980 lots.
According to market data, the comprehensive price for 1# nickel on June 25th was quoted between 129,150 and 130,750 yuan per tonne, with an average price of 129,950 yuan, marking a decrease of 2,500 yuan from the previous day. Spot 1# nickel prices in the Yangtze River region were between 129,200 and 130,800 yuan per tonne, averaging 130,000 yuan, also down 2,500 yuan. In Guangdong, spot nickel was quoted from 131,000 to 131,400 yuan per tonne, with an average of 131,200 yuan, reflecting a decline of 2,100 yuan.
Macroeconomic Influencing Factors
Overseas markets are grappling with rising inflation expectations, which have bolstered anticipation for interest rate hikes and pushed the US dollar index higher, putting pressure on the valuation of US dollar-denominated industrial metals. Concurrently, a pullback in US equity risk assets has triggered capital outflows from the commodities sector. Domestically, month-end capital repatriation is occurring, and anticipated stimulus policies for the manufacturing sector have yet to materialize, leading to subdued market purchasing sentiment. These internal and external headwinds are creating a combined negative effect. Compounding this situation, reports from Indonesia indicate an annual mining quota increase to 360 million tonnes, significantly exceeding the initial quota of 260 million tonnes set earlier this year. This expectation of expanded supply has directly undermined support for nickel prices on the Shanghai exchange, with London Metal Exchange nickel breaking below the $17,000 per tonne level and accelerating its decline towards the session's close.
Supply, Demand, and Industry Chain Dynamics Across Nickel Categories
For laterite nickel ore, a notable increase in shipments of low-grade ore from the Philippines is helping to offset the additional circulation resulting from Indonesia's quota hike. Output growth for sulfide nickel ore remains limited, indicating relatively inelastic supply. Nickel pig iron and nickel matte are experiencing slight tightness. Nickel matte holds a cost advantage for producing refined nickel, and conversion channels from nickel pig iron are opening up. This has led upstream producers to hold firm on prices and be reluctant to sell, resulting in only sporadic transactions with downstream buyers. Mixed hydroxide precipitate hydrometallurgical operations are facing pressure from sulfur costs, leading to reduced operating rates. While recycled nickel capacity is expanding, a shortage of scrap material is limiting its substitution effect. Downstream sectors, including stainless steel and ternary batteries, are in their seasonal low-demand period, with procurement primarily driven by immediate needs, leading to continued inventory accumulation across the entire supply chain.
Today's Trading and Positioning Activity
Both domestic and international markets saw significant declines on heavy volume today, with intensified battles between bulls and bears. Total open interest in the market increased concurrently, with the price action being primarily driven by concentrated short position building. In the spot market, traders proactively offered discounts to move inventory, but downstream buyers exhibited a strong wait-and-see attitude, leading to decreased activity in physical trading.
Macro Outlook and Nickel Price Forecast
Internationally, the focus will be on the release of US inflation data and banking sector stress test results later today, followed by speeches from several officials tomorrow, with the pace of interest rate hikes being a key concern.
Domestically, market participants will monitor monthly monetary operations and policy statements aimed at stabilizing domestic demand.
Core variables to watch include US dollar fluctuations, the implementation progress of Indonesia's mining quota policy, sulfur shipping quotations, stainless steel production schedules, and changes in global inventories. In the near term, expectations of supply expansion and macroeconomic pressures are unlikely to dissipate quickly, suggesting nickel prices will likely maintain a weak, low-level consolidation pattern. However, smelting costs provide a floor of support, limiting the potential for a sharp downward plunge, while selling pressure is expected to persist on any price rebounds.