Nickel

Recent Dynamics in the Nickel Commodity Market

1. **Price Trends**
- Nickel prices on the London Metal Exchange (LME) have recently shown a volatile and oscillating trend. Over the past week, LME nickel prices fluctuated in the range of USD 16,000–17,500 per metric ton. Early in the week, prices dipped slightly due to macroeconomic data, but subsequently recovered as concerns about supply tightenings intensified.
- Prices of the main SHFE (Shanghai Futures Exchange) nickel contract also experienced volatility, trading within the range of CNY 125,000–135,000 per metric ton. The overall trend largely mirrored that of LME nickel prices, although fluctuations were slightly more pronounced due to domestic supply-demand dynamics and exchange rate factors.

2. **Supply Side**
- **Mine Supply**: The Philippines, a major global nickel ore producer, has entered its rainy season, leading to a reduction in nickel ore shipments. Some mines have suspended or reduced mining and transportation activities due to weather and logistical issues, strengthening market expectations of tight nickel ore supplies. Meanwhile, uncertainty persists regarding Indonesia’s nickel ore export policies. Although export quotas remain in place for now, markets worry that future policy tightening could impact global nickel ore supplies.
- **Refined Nickel Supply**: Domestic refined nickel production remains relatively stable, though some enterprises have faced production constraints due to raw material shortages. On the international front, while some large producers have maintained normal operations, others have seen output declines due to equipment maintenance. Overall, global refined nickel supply growth remains limited.

3. **Demand Side**
- **Stainless Steel Industry**: Stainless steel is the primary consumer of nickel. The recent stainless steel market has been stable, with moderate downstream purchasing demand. While some stainless steel producers have engaged in restocking, overall purchase volumes remain modest. With the onset of winter, engineering demand for stainless steel in some regions has slowed, weakening support for nickel demand.
- **New Energy Vehicle (NEV) Industry**: Demand for nickel from the NEV sector continues to grow. Rising global NEV sales have driven increasing demand for nickel in power batteries. However, the recent growth rate of the NEV market has slowed, and some battery manufacturers hold high inventory levels, leading to adjusted procurement rhythms. Consequently, short-term demand growth has fallen short of expectations.

4. **Inventory Status**
- LME nickel inventories have continued to decline, reaching approximately 120,000 metric tons as of now, a decrease of about 5% compared to the previous month. These low inventory levels provide support for nickel prices, with markets concerned that potential supply shortages could lead to further inventory drawdowns.
- SHFE nickel inventories have fluctuated but remain largely unchanged overall. Domestic social inventories have seen a slight increase due to higher nickel imports, but they remain at relatively low levels.

5. **Macroeconomic Factors**
- Growing uncertainty in the global economic situation has heightened concerns about economic slowdown, impacting demand expectations for industrial metals like nickel. Additionally, fluctuations in the US dollar index influence nickel prices: a stronger dollar tends to pressure nickel prices downward, while a weaker dollar provides support.
- Changes in monetary and fiscal policies across countries also affect the nickel market. For instance, increasing expectations of central bank rate hikes in some nations may tighten market liquidity, thereby inhibiting the rise of commodity prices.

Analysis and Judgment

1. **Supply Side**: Tightening expectations for nickel ore supplies, driven by the rainy season in the Philippines and policy uncertainty in Indonesia, combined with limited growth in refined nickel supply, provide some support for nickel prices. However, attention should be paid to subsequent changes in Indonesian policies and the resumption of mine production.
2. **Demand Side**: Stainless steel demand is stable but lacks growth momentum, while short-term NEV demand growth is below expectations, reducing the supporting effect on nickel prices. Nevertheless, in the long term, demand from the NEV sector is expected to continue growing.
3. **Inventory Side**: The continued decline in LME nickel inventories highlights the significant supporting effect of low inventory levels on prices. Although domestic inventories fluctuate, they remain relatively low, providing a favorable factor for nickel prices.
4. **Macro Side**: Increased uncertainty in the global economic situation and monetary policies imposes pressure on the nickel market. Macroeconomic factors will be key drivers of short-term price volatility.

Forecast

1. **Short-term (1–2 weeks)**: Nickel prices are expected to continue oscillating. Support from tight supply expectations and low inventories will be counterbalanced by weak demand and macroeconomic uncertainties, limiting upside potential. LME nickel prices may fluctuate between USD 16,000–17,800 per metric ton, while SHFE main nickel contracts may trade between CNY 125,000–136,000 per metric ton.
2. **Medium-term (1–3 months)**: If nickel ore supplies recover after the rainy season in the Philippines or if Indonesia implements more relaxed export policies, nickel prices may face downward pressure. Conversely, if NEV demand exceeds expectations or the macroeconomic environment improves, prices could rise. Medium-term volatility may widen, with LME prices ranging between USD 15,500–18,500 per metric ton and SHFE prices between CNY 120,000–140,000 per metric ton.
3. **Long-term (3–6 months and beyond)**: As the NEV industry continues to develop, nickel demand is expected to increase, providing long-term upward momentum for prices. However, attention must be paid to the increase in global nickel ore supplies and the impact of technological advancements on nickel demand structures. Long-term nickel prices are expected to trend upward gradually, albeit with significant volatility during the process.