The U.S. May CPI figures have rebounded, cooling expectations for interest rate cuts and boosting the dollar, which put pressure on the market. Overnight, London nickel closed down by 1.47%. The latest closing price for LME nickel was $17,730 per tonne, a drop of $265. The trading volume was 12,574 lots. In the domestic market, the overnight session for Shanghai nickel saw the latest closing price at ¥134,410 per tonne, a decrease of ¥980.
London Metal Exchange (LME) nickel inventories reported on June 10 were 274,710 tonnes, a reduction of 138 tonnes from the previous day.
Today, Shanghai nickel futures opened lower across the board. The main contract for July 2024 opened at ¥133,640 per tonne, down ¥1,750 from the previous close. At 9:15 AM, the main Shanghai nickel contract (July 2024) was quoted at ¥134,500 per tonne, down ¥890. Shanghai nickel opened lower and continued to decline, with the market maintaining a weak and volatile trend. On the macro front, the official U.S. May CPI data has been released, showing a year-on-year increase of 4.2% and a month-on-month rise of 0.5%. Energy costs drove inflation to rebound more than expected, completely reversing market expectations for rate cuts. Market focus has now shifted to the upcoming PPI data and the Federal Reserve's policy meeting. Global central banks are entering a period of intensive policy activity, with expectations for a European Central Bank rate hike heating up. The U.S. dollar has firmly held above the 100 level, while U.S. stock markets collectively experienced a sharp decline. LME nickel prices continued their weak trend, exploring lower levels. Pressure from the dollar's valuation, combined with sluggish demand and high inventories, has created a dual negative resonance from both macroeconomic and fundamental factors, keeping short-term price movements under sustained pressure.
Panoramic View of Nickel Supply and Demand: Structural Divergence Across Five Categories
The global nickel supply currently shows significant structural divergence, with overall abundance coexisting with localized tightness. In the lateritic nickel ore segment, Indonesia's reduction in high-grade mining quotas has led to tight circulation of high-grade ore. While the Philippines has supplemented supply with increased low-grade ore, the total volume remains stable with a slight increase. Sulfide nickel ore is constrained by the depletion of global high-quality shallow resources, and the commissioning cycle for new mines is lengthy, leading to a rigid and tight long-term supply. In the intermediate product sector, the conversion progress of high-grade matte via hydrometallurgy is slower than market expectations, limiting the increase in spot circulation. Nickel-cobalt hydroxide (MHP) is impacted by high sulfur prices, which significantly squeeze hydrometallurgical profit margins. Small and medium-sized capacities are undergoing concentrated maintenance, leading to a noticeable contraction in short-term supply. Recycled nickel production growth has largely stagnated due to constraints in scrap steel raw material supply and import regulations. On the demand side, stainless steel has entered its traditional off-season, and ternary materials maintain rigid procurement, leaving overall room for demand growth limited.
Today's Macro Focus: CPI Data Sets Tone for Short-Term Nickel Price Direction
The market will next focus on: first, the inflation verification effect of the U.S. PPI data; second, the latest developments in Middle East geopolitical tensions; and third, marginal changes in domestic downstream demand. On the industry side, it is necessary to track the implementation pace of Indonesia's nickel ore quota details and the strength of downstream bargain-hunting restocking. In the short term, nickel prices will maintain a pattern of contest between macroeconomic headwinds and cost support, with overall weak and range-bound volatility. There is some support at the lower smelting cost line. If the CPI data exceeds expectations and further raises rate hike expectations, nickel prices still have room to fall further. Otherwise, a technical rebound may occur.
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