According to Zhitong Finance APP, China Securities Co., Ltd. (HK: 601066) has released a research report stating that nickel prices have recently shown relative strength due to cost support and supply-side disruptions.
On the supply side, drought conditions linked to El Nino in Indonesia have caused RKEF ferronickel plants in the IMIP industrial park to begin production cuts as water supply for operations became strained, with operating loads reduced by approximately 30%-40% compared to previous levels. If this situation persists for half a month, it is estimated to affect high-grade nickel pig iron output by approximately 50,000-70,000 physical tons, equivalent to roughly 5,500-7,700 nickel tons.
On the demand side, the market is entering the traditional "Golden September and Silver October" peak season, with demand revised upward at the margin and supported by pre-holiday stocking activity. Domestic refined nickel continues to see inventory drawdowns, with both Shanghai Futures Exchange and social nickel inventories declining.
The main views of China Securities Co., Ltd. are as follows:
Lithium: According to Baiinfo, the average market price of industrial-grade lithium carbonate this week was 130,000 yuan per ton, up 3.2% from last week, while the average price of battery-grade lithium carbonate was 133,000 yuan per ton, up 3.1% from last week. On the supply side, lithium carbonate production is expected to maintain a slight growth trend this week. Previously idled lithium salt plant capacity continues to recover, production lines are operating steadily, long-term contract shipments from lithium salt plants are proceeding smoothly, and with prices recovering, some lithium salt plants have increased their willingness to sell on the spot market. Combined with continuous arrivals of Zimbabwe lithium concentrate to supplement domestic spodumene feedstock, industry supply is growing steadily. On the inventory front, the industry continued its destocking trend this week, lithium salt plants maintained long-term contract deliveries, spot inventories remained at low levels, term traders showed relatively active restocking sentiment during the week, and downstream material plants continued their buy-on-dips strategy. Futures warehouse receipts saw significant cancellation, with the previous trading day's futures warehouse receipt volume at 35,858 tons. On the demand side, market demand was relatively subdued this week, with downstream procurement pace slowing. Cathode material and downstream battery plants, having not pre-stocked ahead of the dual holidays, had sufficient short-term raw material inventories and mostly maintained buy-on-dips purchasing. However, energy storage sector demand continued to improve, with lithium iron phosphate enterprises maintaining high utilization rates, continuously supporting lithium carbonate demand; the ternary battery segment saw order cancellations, with monthly production schedules declining on a month-over-month basis. According to Baiinfo's survey of 27 sample battery enterprises, China's total battery enterprise production schedule for September 2026 is 317.9 GWh, up 4.48% month-over-month. On the resource side, the significance of domestic lithium resource self-sufficiency is becoming increasingly prominent.
Nickel: The LME nickel price this week was $16,385 per ton, up 0.92% from last week; the SHFE nickel price was 125,320 yuan per ton, up 0.99% from last week. SHFE nickel inventory this week stood at 108,100 tons, LME nickel inventory at 284,900 tons, with combined inventories of 393,000 tons, up 1.5% from last week. On the supply side, nickel sulfate smelting was hampered by persistently inverted profit margins this week, with some producers continuing their previously cautious production pace and idled producers not yet resuming operations. However, some producers halted electrowinning operations, leading to increased nickel sulfate output. Market circulating supply remained relatively loose, with overall supply edging up slightly. On the demand side, battery-grade nickel sulfate demand maintained a rigid procurement pattern this week, with ternary precursor enterprises only executing established long-term contracts and showing low willingness to actively restock before the holiday. Downstream cathode plants adhered to a production-based-on-sales model, keeping raw material inventories at low levels, and continued to press for price reductions even as upstream quotes were lowered, resulting in contracted spot transaction volumes. Electroplating-grade nickel sulfate demand was similarly subdued, with PCB and hardware enterprises purchasing only on a rigid-demand basis and few new bulk orders emerging.
Rare Earths & Magnetic Materials: Praseodymium-neodymium prices rose this week, while dysprosium and terbium prices declined. As of Wednesday this week, the average market price of praseodymium-neodymium oxide was 735,500 yuan per ton, up 0.89% from last Friday's price; the average market price of dysprosium oxide was 1,435,000 yuan per ton, down 0.35% from last Friday; and the average market price of terbium oxide was 6,575,000 yuan per ton, down 0.75% from last Friday. From a supply-demand fundamental perspective, the supply side remained stable: separation enterprises operated normally, oxide supply remained tight, and with the dual holidays approaching, upstream holders kept quotes firm and were reluctant to sell at low prices, with limited spot availability in the market. Metal plants operated steadily overall, and pre-holiday oxide and metal market supply was relatively stable. Demand-side releases were limited: ahead of the Mid-Autumn and National Day holidays, magnetic material enterprises restocked only in small quantities based on rigid demand, some small and medium-sized plants made purchases, downstream order releases were generally moderate, and pre-holiday restocking volumes were limited. Magnetic material producers mostly focused on drawing down inventories, shutting down for the holidays according to production schedules, and were cautious about procurement and restocking.
Risk warnings: A significant global economic recession leading to cliff-edge consumption contraction; uncontrolled U.S. inflation causing the Federal Reserve to tighten monetary policy beyond expectations, with a strong dollar weighing on equity asset prices.
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