This week's perspective suggests that while Indonesian policies are gradually tightening the supply of raw materials for the nickel industry chain, constraints are easing overall. This is due to the resumption of nickel ore shipments from the Philippines and Iran's initiation of revisions to the Strait of Hormuz toll regulations. Furthermore, market sensitivity to Indonesian policy has dulled.
On the other hand, from a macro perspective, persistently strong U.S. inflation expectations, coupled with the change in Federal Reserve leadership, have intensified market concerns about potential Fed rate hikes, directly pressuring the broader base metals sector. Looking ahead, price support for nickel and stainless steel may gradually weaken, potentially opening a window for price declines.
The reference range for Shanghai nickel contract 2606 is 130,000-142,000 yuan per ton. The reference range for stainless steel contract 2606 is 14,000-15,000 yuan per ton.
Strategy for Action
In terms of operations, consider positioning for short trades.
Potential Risks and Uncertainties
Key risks include geopolitical events, Federal Reserve policy decisions, tariff disruptions, the pace of domestic economic recovery, and industrial policy changes in Indonesia and the Philippines.
Analysis of Price Influencing Factors
Macroeconomic Environment
International Developments
On Middle Eastern issues, the U.S. House of Representatives passed a resolution aimed at limiting President Trump's authority to use military force against Iran, demanding an end to military actions. President Trump stated that he is working on a deal with Iran, and a maritime blockade might persist until U.S. Labor Day on September 7th this year. Regarding Russia and Ukraine, President Putin expressed Russia's full readiness and willingness to hold peace talks with Ukraine at the U.S. military base in Anchorage, Alaska. Ukrainian President Zelenskyy issued an open letter to President Putin, proposing a meeting and setting a date.
The U.S. ISM Services PMI for May rose to a three-month high of 54.5, exceeding the expected 53.8. The Federal Reserve's Beige Book indicated that economic activity showed "slight to modest" growth in 10 of the 12 Federal Reserve districts. The Middle East conflict, pushing up energy costs, is the primary source of inflationary pressure, with spillover effects into shipping, packaging, groceries, and fertilizers, leading to weakening consumer confidence. On the employment front, U.S. initial jobless claims rose by 13,000 to 225,000 last week, exceeding economists' expectations and hitting the highest level since February this year. U.S. Challenger job cuts for June were 97,000, with 38,600 attributed to AI, accounting for 40%.
U.S. non-farm payrolls increased by 172,000 in May, far surpassing the market expectation of 85,000. The unemployment rate remained unchanged at 4.3%, and average hourly earnings rose 0.3% month-on-month, both in line with expectations. Data for March and April was revised up by a combined 93,000, making the past three months' job gains the strongest in over two years. Following the data release, interest rate swap markets fully priced in a Fed rate hike within the year.
A leaked internal memo from new Fed Chair Warsh pledged adherence to "the finest traditions of the Fed" while clearly stating a desire for change. Several former senior Fed officials revealed that Warsh plans to gradually withdraw the current forward guidance rules on interest rates and remove language from policy statements hinting at the direction of future rate moves. Concurrently, Warsh appointed two conservative policy figures as transition advisors, one of whom had previously suggested a "complete overhaul of the Fed." Meanwhile, hawkish voices within the Fed are growing louder. Cleveland Fed President Hammack stated that while maintaining current rates remains reasonable, if recent high inflation data persists, policy action may soon be necessary, including considering further rate hikes to address the risk of sustained high inflation.
Domestic Developments
In the first four months of this year, China's total service imports and exports reached 2,485.32 billion yuan, a year-on-year increase of 4.9%. Exports were 985.0 billion yuan, up 15%, while imports were 1,500.32 billion yuan, down 0.8%. The service trade deficit narrowed by 139.74 billion yuan year-on-year to 515.32 billion yuan.
China officially released guidelines for accounting for non-fossil energy electricity consumption, clarifying that green certificate trading will be the primary basis for accounting for electricity consumption from non-fossil sources. This means that corporate purchases of green certificates will become a crucial credential for proving the use of green power and accounting for carbon emissions.
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