The Federal Reserve's hawkish expectations have propelled the US dollar index to a 13-month high, with London nickel falling by 2.52%. The latest closing price for London nickel was $16,795 per tonne, a decrease of $435, with trading volume reaching 16,474 lots. In the domestic market, the overnight session for the main Shanghai nickel futures contract settled at 128,920 yuan per tonne, down 2,260 yuan or 1.72%.
According to data from the London Metal Exchange (LME), nickel inventories on June 24 stood at 275,448 tonnes, a reduction of 690 tonnes compared to the previous day.
Market analysis indicates that Shanghai nickel futures opened lower across the board today. The main July 2607 contract opened at 129,340 yuan per tonne, down 1,840 yuan from the previous close. As of 9:15 AM, the July 2607 contract was quoted at 129,290 yuan per tonne, a decline of 1,890 yuan. The market trended lower after opening and remained weak with volatile movements. From a macroeconomic perspective, the combination of a strong US dollar and receding geopolitical risk premiums is putting collective pressure on industrial metals. Persistent hawkish signals from the Fed have driven the US dollar index to its highest level in over a year, while elevated US Treasury yields continue to suppress valuations across the dollar-denominated non-ferrous metals sector. Easing US-Iran tensions and the reopening of key shipping lanes have led to a rapid unwinding of Middle East risk premiums, causing synchronized declines in crude oil and metals like aluminum and nickel. Profit-taking by investors at the quarter's end has further amplified the downward trend. Domestically, liquidity remains reasonably ample. A recovery in the consumer electronics and new energy infrastructure sectors, coupled with the implementation of policies aimed at boosting consumption and fostering new quality productive forces, means short-term market sentiment is largely being driven by macroeconomic factors.
Analysis of Nickel Supply, Demand, and Industry Chain Dynamics
The raw material sector is exhibiting a structurally divergent pattern. For laterite nickel ore, approval quotas for mining in Indonesia continue to tighten, with the pace of new permit issuance remaining slow. The official application window is set to open in the third quarter. While current port inventories can support short-term production, expectations for tighter future supply are gradually intensifying. Sulfide nickel ore output remains steady, with stable market circulation. Nickel matte supply is ample, serving as a core supplementary source for refined nickel production. Nickel-cobalt hydroxide output has fallen short of expectations due to tight upstream raw material supply, leading to reduced operating rates at hydrometallurgical production lines. The recycled nickel sector has sufficient capacity, but low scrap material circulation limits its overall impact on market supply.
Spot market premiums and discounts are diverging across different nickel products. Domestic nickel maintains a premium structure, while imported nickel and electro-deposited nickel are trading at a discount. The price of high-grade nickel pig iron remains stable, with cost support from the upstream sector still present. The downstream stainless steel industry is currently in its traditional off-season, characterized by weak end-user demand, which has somewhat weakened the linkage between futures and spot markets. Steel mills maintain decent profit margins, supporting the current high production schedule. Both domestic refined nickel and stainless steel inventories continue to show a slight drawdown, but overall inventory levels remain relatively high. The fundamental tug-of-war within the industry chain is intensifying.
Macro Outlook and Nickel Price Forecast
The short-term macroeconomic focus remains on Federal Reserve officials' statements and inflation data, with the strong US dollar trend unlikely to reverse fundamentally in the near term. On the industry side, close attention should be paid to the finalization of Indonesia's nickel ore RKAB (Work Plan and Budget) approvals in July. If the scale of new quotas falls short of market expectations, upstream cost support will reassert itself. Overall, the nickel market is currently in a phase of contest between macroeconomic headwinds and cost support. Nickel prices are expected to maintain a weak and volatile trend in the short term, with the overall bias leaning towards weakness, though downside potential is underpinned by upstream cost levels.
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