In the nickel futures market, renewed expectations for US interest rate hikes triggered profit-taking by long positions, leading to a 0.98% decline for overnight LME nickel. The latest LME nickel settlement price was $18,635 per tonne, down $185 or 0.98%, with a trading volume of 7,942 lots. On the domestic front, the overnight Shanghai nickel contract settled at 139,040 yuan per tonne, a decrease of 1,760 yuan or 1.25%.
According to data from the London Metal Exchange (LME), nickel inventories on June 4th stood at 274,236 tonnes, unchanged from the previous day.
Yangtze River Nonferrous Metals Network reports: Today, Shanghai nickel futures opened lower across the board. The main July 2607 contract opened at 139,010 yuan per tonne, down 1,790 yuan from the previous close. As of 9:05, the main Shanghai nickel July 2607 contract was quoted at 138,040 yuan per tonne, a drop of 2,760 yuan. Shanghai nickel opened lower and continued its decline, with the market maintaining a weak and volatile trend.
From a macro perspective, the overnight weakness in LME nickel was due to a confluence of macroeconomic and industry-specific negative factors. Stronger-than-expected US economic data has revived market speculation about potential Federal Reserve rate hikes, with rising US dollar and Treasury yields putting pressure on base metals valuations. Easing tensions in Middle East negotiations have diminished geopolitical risk premiums, weakening support from energy costs. With the impending implementation of US metal tariffs, funds have taken profits and exited positions ahead of time. This, combined with disappointing earnings reports from tech companies casting doubt on AI-related nickel demand, the industry entering its traditional off-season, and weak downstream procurement, has led to concentrated profit-taking by long positions, causing nickel prices to retreat accordingly.
Current Supply and Demand Dynamics in the Nickel Industry Chain: Structural Divergence Becomes Apparent
Significant divergence is evident across different segments of the nickel industry chain. Upstream, the tightness in laterite nickel ore has eased due to increased shipments from the Philippines, leading to weaker ore prices. Sulfide nickel ore resources remain scarce with limited production increases. Intermediate products like nickel matte are supported by solid cost fundamentals, while Mixed Hydroxide Precipitate (MHP) maintains firm offers underpinned by rigid demand from the new energy sector. Supply of recycled nickel is limited and fluctuates in line with primary nickel. Overall, the market presents a tug-of-war scenario with tight upstream raw materials and weakening downstream stainless steel demand. As stainless steel enters its off-season in June and refined nickel inventories accumulate, the tight supply situation for nickel pig iron (NPI) remains unchanged.
Nickel Price Forecast for June 5th: Focus on Three Key Variables
Today's market will focus on three core variables: the subsequent fluctuation pattern of the US dollar index, the progress of Indonesia's nickel product export regulation details, and nickel ore arrival data from the Philippines. In the short term, bearish macro sentiment is expected to continue dominating the market, with nickel prices forecast to remain weak and volatile. The projected trading range for nickel is between 137,000 and 139,000 yuan per tonne. Downside is supported by Indonesia's nickel ore quota reductions and smelting costs, while upside is capped by high global refined nickel inventories and weak stainless steel demand during the off-season. For trading strategies, a cautious, wait-and-see approach is recommended, with vigilance for price volatility risks stemming from geopolitical events and sudden policy changes in Indonesia.
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