As a new week begins, a series of significant economic data points are set for release, potentially influencing market sentiment. The nickel market is anticipated to experience relatively muted price fluctuations on Monday.
In the nickel futures market, weaker-than-expected US non-farm payroll data led to a decline in the US dollar index, providing a boost to the broader base metals sector. Overnight, London Metal Exchange (LME) nickel closed up by 0.4%. The latest LME nickel settlement price was $16,360 per tonne, marking an increase of $65. Trading volume reached 7,898 lots. Domestically in China, the most actively traded Shanghai Futures Exchange (SHFE) nickel contract settled at 126,740 yuan per tonne during the night session, down 30 yuan, a marginal decline of 0.02%.
LME nickel inventories reported on July 3rd stood at 274,620 tonnes, unchanged from the previous day.
According to market analysis, SHFE nickel contracts opened lower across the board today. The main September 2024 contract opened at 126,770 yuan per tonne, unchanged from the prior session's close. By 9:15 AM, the main contract had risen to 127,210 yuan, up 440 yuan, indicating a recovery from the lower open to trade at higher levels. From a macroeconomic perspective, overseas factors played a key role. US non-farm payroll data for June fell significantly short of market forecasts, leading to a marked cooling of expectations for Federal Reserve interest rate hikes this year. Consequently, the US dollar index retreated to around 100.845 last week, creating a window for a valuation recovery in dollar-denominated commodities. US stock markets were closed on Friday for the Independence Day holiday. However, US equity index futures rose at the start of this week, signaling a marginal improvement in market risk appetite, which in turn supported a broader sentiment recovery in the base metals sector. Domestically, expectations for intensified pro-growth policy support continue to build. Manufacturing sector activity is showing signs of marginal recovery, providing a floor for downstream demand expectations. The temporary easing of negative macro factors both domestically and internationally is considered the primary external driver behind LME nickel's strength over the past week.
Supply-Demand Dynamics Across Five Key Categories: Structural Divergence Emerges as Main Theme
A clear divergence is evident in the upstream mining sector. Lateritic nickel ore supply is facing sustained tightening from core mining areas, constrained by Indonesia's annual mining quota reductions, formally establishing a tight balance in the ore market. For sulfide nickel ore, the release of new global production capacity remains limited, keeping the overall supply-demand situation relatively stable. The pace of operations at the midstream smelting stage has generally slowed. The ramp-up of nickel matte capacity is progressing slower than anticipated at the beginning of the year, and new pyrometallurgical projects are facing policy restrictions, limiting their scale. Mixed Hydroxide Precipitate (MHP) production costs have risen substantially due to persistently high international sulfur prices, leading several hydrometallurgical projects to reduce operating rates. As a result, the actual supply increase is falling short of earlier projections. Recycled nickel volumes have increased alongside a recovery in downstream alloy demand, but overall supply elasticity remains insufficient to fill the gap left by primary nickel supply.
Current Industry Chain Status and Today's Nickel Price Forecast
The current nickel industry chain is characterized by rigid cost support upstream, structurally tightening supply midstream, and weakly recovering demand downstream. Stainless steel production schedules remain at high levels, and the trend towards higher nickel content in new energy batteries provides long-term support for nickel demand. For today, the momentum from the recent macro sentiment recovery is expected to persist. LME nickel is forecast to continue its relatively strong, range-bound movement. Domestic SHFE nickel is likely to follow the overseas market with a slight upward bias, with its trading range expected to shift higher. Market participants should remain vigilant for potential short-term volatility stemming from fluctuations in the US dollar index and policy-related news from Indonesia. Intraday price swings may widen, and a cautious, watchful approach is recommended for trading operations.
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