SHFE nickel showed a "dip-then-rise" trend last week. It hit a low of 115,720 yuan/t on Monday, then surged past the 120,000 mark midweek to a peak of 123,430 yuan/t on rumors of coordinated cuts by leading nickel producers. It closed Friday at 120,580 yuan/t, up 4.82% w/w.
On the macroeconomic front, fluctuating expectations for a second Fed rate hike this year kept liquidity concerns alive, while supply-side disruptions in Indonesia became the dominant logic last week.
Regarding supply and costs, nickel ore prices weakened overall. Philippine Ni:1.4% CIF dropped US $3 w/w to US $51/wet mt, and Indonesian domestic ore transaction premiums weakened significantly, shifting to a buyer's market. NPI prices moved narrowly downward, with high-grade NPI (delivered basis, tax included) falling from 1,030 to 1,015 yuan/nickel (-1.46%), as October stainless steel production cuts weighed on raw material procurement. In intermediates, the MHP nickel discount fell to 84%, and high-grade matte to 92%. The feedstock cost center continues to shift lower, while shrinking cobalt by-product revenue continues to squeeze hydrometallurgical project margins.
Turning to demand, the overall picture remains weak. Downstream stainless steel restocking willingness is low, social inventory destocking is slow, and steel mills' persistently inverted profits strengthen their willingness to press raw material prices. In the new energy sector, ternary precursor and cathode material demand continues to contract, with October battery cell production schedules down about 15% m/m. LFP's substitution effect on ternary continues to solidify. Nickel sulfate fell 1,000 yuan/t to 26,200 yuan/t, reflecting continued light actual end-use transactions.
To summarize the market, the recent rally was primarily driven by Indonesian production cut rumors and capital sentiment, lacking demand-side support. The key market divergence lies in whether these production cuts will materialize. If executed, they will materially contract high-grade matte and MHP supply, lifting the intermediate price center. If they remain rumors, against the backdrop of high inventories and weak demand, nickel prices risk returning to a weak range.
Looking ahead to next week, SHFE nickel is expected to consolidate between 116,000-121,000 yuan/t.
Key factors to watch include the Fed meeting outcome, Indonesian nickel project supply updates, and downstream steel mill production schedules.
