On April 7, 2025, the SHFE most-traded nickel contract 2505 hit the limit-down at the opening and, despite briefly resuming trading, still plunged by 7.51% during the session, closing at Yuan 118,640/t. The primary trigger for this sharp decline in nickel prices was the U.S. imposition of so-called "reciprocal tariffs."
In the early hours of April 3, 2025, U.S. President Donald Trump signed two executive orders at the White House concerning "reciprocal tariffs," announcing the establishment of a 10% minimum benchmark tariff on all trading partners. Additionally, higher tariffs were imposed on certain countries, including a 34% tariff on Chinese imports, set to take effect on April 9, Eastern Time. In a strong response the following day, China announced countermeasures, including a 34% tariff on all U.S. goods, the inclusion of 11 U.S. companies on its Unreliable Entity List, the suspension of import qualifications for six U.S. firms, and the implementation of export controls on selected medium-to-heavy rare earth materials.
Currently, China's refined nickel exports are primarily directed toward regions with LME warehouses, such as Chinese Taiwan, Singapore, and South Korea. Among them, Singapore has publicly stated that it will not retaliate against U.S. tariffs, and similar countermeasures are unlikely from South Korea and Chinese Taiwan as well.
According to Chinese customs data, from January 2023 to the present, China has exported a total of 1,979.92 tonnes of refined nickel to the United States -- accounting for less than 1% of China's total refined nickel exports. As such, the U.S. executive order on "reciprocal tariffs" has a negligible direct impact on China's refined nickel exports. However, market concerns persist that the U.S. tariff hike may ripple through downstream nickel industries, further exacerbating global supply chain uncertainty and indirectly weakening industrial demand for nickel.
Source: GACC, Mysteel
Currently, the U.S. mainly imports refined nickel from Canada. On April 3, Canadian Prime Minister Mark Carney announced new countermeasures in Ottawa against U.S. tariffs, along with a series of support measures for affected businesses and workers. These include a 25% tariff on fully assembled vehicles imported from the U.S. that do not comply with the USMCA (United States-Mexico-Canada Agreement). Additionally, a 25% tariff will be levied on non-Canadian and non-Mexican components in fully assembled vehicles imported from the U.S. that do comply with USMCA rules.
The oversupply situation in the refined nickel market remains unchanged. LME inventories remain elevated, and China's refined nickel production is expected to continue rising. According to Mysteel's survey of 20 producers, China's refined nickel production reached 36,665 tonnes in March, marking a month-on-month increase of 10.61% and a year-on-year surge of 50.19%. From January to March 2025, total refined nickel production amounted to 103,389 tonnes, up 44.46% year-on-year.
Source: Mysteel
Meanwhile, Indonesia's recent policies to support nickel prices have not yet been fully implemented. With the end of the rainy season in major nickel mining regions, the bullish factors are gradually fading.
In terms of costs, calculations indicate that current nickel prices have fallen below the production cost of refined nickel produced via the integrated nickel matte process, while losses for refining with outsourced raw materials have further widened. However, since Indonesian nickel ore prices are tied to LME prices, refined nickel production costs are expected to decline. Once market pessimism gradually subsides, cost support from refined nickel could help stabilize and even lift nickel prices.
Written by Cora Ji, jiruyan@mysteel.com
