Nickel prices experienced a slight decline on June 2nd. The market was characterized by weak buying interest at elevated price levels and overall cautious inquiry activity.
Key Price Movements
Shanghai nickel futures saw gains in the afternoon session. The main July 2607 contract opened at 144,380 yuan per tonne. It reached a session high of 145,600 yuan and a low of 143,080 yuan, ultimately closing at 144,850 yuan. This represented an increase of 1,630 yuan, or 1.14%. Trading volume for the July contract was 290,015 lots.
Market Data Summary
According to market data, the comprehensive price for 1# nickel on June 2nd was quoted between 143,250 and 144,350 yuan per tonne, with an average of 143,800 yuan. This marked a decrease of 200 yuan from the previous day. The spot price for 1# nickel was between 143,400 and 144,400 yuan per tonne, averaging 143,900 yuan, down 150 yuan. In Guangdong, spot nickel was quoted from 144,600 to 145,000 yuan per tonne, with an average of 144,800 yuan, reflecting a drop of 300 yuan.
Macroeconomic Influences
On June 2nd, nickel prices fluctuated within a narrow range before a minor pullback. The weakening trend was driven by a combination of domestic and international macroeconomic factors and geopolitical conditions. Overseas, rising US inflation data fueled speculation about interest rate hikes, leading to a steady climb in the US dollar, higher Treasury yields, and a concentration of US stock market funds in the technology sector. Declines in new energy stocks weighed on sentiment towards base metals. Domestically, the peak season for stainless steel is nearing its end, with downstream steel mills showing low purchasing enthusiasm. A slight accumulation of refined nickel inventories continued to pressure the market. Multiple negative factors contributed to this round of price correction. However, tight supply and demand for upstream raw materials provided underlying cost support, suggesting the potential for a short-term consolidation and recovery in the market.
Divergence in Raw Material Supply and Demand
The supply and demand dynamics for various nickel raw materials showed significant divergence. Laterite nickel ore supply remained tight overall due to a 30% reduction in Indonesia's quotas, with increased shipments from the Philippines insufficient to fill the gap, keeping ore prices firm at high levels. Sulfide nickel ore capacity expansion was limited, keeping spot offers robust. High-nickel matte production growth fell short of market expectations, constrained by high conversion costs. MHP (Mixed Hydroxide Precipitate) saw the most pronounced supply contraction across all categories, as soaring sulfur prices sharply increased smelting costs, leading to shutdowns at multiple plants. Recycled nickel capacity growth was slow, constrained by scrap material supply. The industrial chain is characterized by rising upstream costs, structural divergence in the midstream, and weak downstream demand. While nickel sulfate supply is tight and refined nickel supply is ample, rigid demand from the new energy sector provides a floor for the industrial chain.
Sluggish Spot Trading Activity
High and volatile nickel prices drove spot offers higher, but market traders were heavily inclined to wait and see, resulting in overall weak transaction performance. Downstream steel mills prioritized consuming their own existing raw material inventories and found it difficult to accept the relatively high raw material prices. The overall purchasing pace continued to slow, with most market transactions concentrated on lower-priced sources offering better value.
Outlook and Key Focus Areas
Looking ahead, the market will closely monitor several key overseas economic indicators and speeches from Federal Reserve officials. It will also track the implementation of new regulations for intermediate products in Indonesia and the dynamics of nickel ore exports from the Philippines. Tightening supply in the raw material sector provides solid cost support. The current short-term decline is considered a phase of adjustment, with a high likelihood of the market consolidating and warming up. The market is expected to maintain its characteristic range-bound fluctuations. From a practical trading perspective, opportunities may exist to establish long positions at lower levels based on key support levels, in anticipation of a subsequent corrective rebound. Expectations for raw material supply contraction are likely to gradually influence the pace of nickel price movements.
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