Nickel futures on the Shanghai market trended lower in Tuesday's afternoon session. The most active July 2024 contract opened at 133,640 yuan per tonne. It reached an intraday high of 135,220 yuan and a low of 133,130 yuan, ultimately settling at 133,980 yuan. This represents a decline of 1,410 yuan, or 1.04%. Trading volume for the July contract stood at 222,328 lots.
According to market data, the comprehensive price range for 1# nickel on June 11th was 133,500 to 135,800 yuan per tonne, with an average price of 134,650 yuan, down 1,200 yuan from the previous day. The spot price range for 1# nickel was 133,700 to 135,700 yuan per tonne, averaging 134,700 yuan, also a decrease of 1,200 yuan. In the Guangdong spot market, nickel prices ranged from 136,200 to 136,600 yuan per tonne, averaging 136,400 yuan, which was 400 yuan lower.
Macroeconomic Influences
The release of the stronger-than-expected US CPI data for May has solidified market expectations that the Federal Reserve will not cut interest rates this year. This has propelled the US dollar index to a two-month high, prompting a broad revaluation of dollar-denominated industrial metals. A pullback in major US tech stocks has cooled risk appetite, leading to a reduction in long positions in metals by cross-border funds. The general bearish sentiment across commodity markets has now spread to nickel.
Additionally, contracting manufacturing orders in Europe and the US, coupled with the seasonal slowdown in China's stainless steel and new energy sectors, have dampened downstream purchasing enthusiasm, leaving nickel prices without underlying support.
Current Supply and Demand Dynamics
On the supply side, the availability of high-grade laterite nickel ore has tightened due to significant quota reductions in Indonesia, although this has been partially offset by increased supply of lower-grade ore from the Philippines, keeping overall supply stable. High-quality sulfide nickel ore resources remain scarce, with new capacity additions lagging, indicating a long-term tightness. The conversion to nickel matte is progressing slower than anticipated, limiting spot supply increments. Production of mixed hydroxide precipitate (MHP) is being constrained by high sulfur prices and some capacity undergoing maintenance, tightening availability. Recycled nickel supply is stable but growth is stalled due to limitations in scrap nickel feedstock.
Sluggish Spot Market Activity
The nickel industry chain is currently caught between cost support and high inventory levels. Stainless steel mills are adopting a cautious, wait-and-see approach, focusing on destocking. Production schedules for ternary materials used in new energy batteries remain steady, but procurement is largely limited to immediate needs. The spot market is well-supplied, resulting in light trading activity. Premiums and discounts have remained stable, with downstream buyers showing limited willingness to restock even at lower prices, leading to an overall quiet market.
Short-Term Outlook and Key Focus
Nickel prices are expected to continue their weak adjustment. Market attention from June 11th to 12th will center on three key variables: speeches from Federal Reserve officials, the details of Indonesia's export quotas, and pre-holiday stocking activity in China ahead of the Dragon Boat Festival. Nickel prices are forecast to maintain a weak and volatile trend, primarily driven by macro headwinds with limited support from production costs. The key support level to watch is around 133,000 yuan per tonne; a break below this level could accelerate the downward movement.
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