Last week, the SHFE nickel main contract showed an oscillating downward trend, trading in the range of Yuan 116,200-120,470/t and closing at Yuan 117,190/t on Friday. On the macro side, the Fed's FOMC meeting concluded last week, maintaining rates unchanged as expected, but post-meeting expectations for the next rate hike heated up. The overall macro sentiment was bearish, exerting significant pressure on the base metals complex. On the fundamentals side, the previously rumored joint supply-side production cuts have yet to materialize substantially. Market surveys indicate that October output was basically unchanged. This "much ado about nothing" feedback caused previously long-leaning funds to exit, and the futures market returned to weak fundamental logic.
Fundamentals across various product sectors continued to run weakly. On the nickel ore side, the delayed Philippine rainy season has kept supply consistently ample, coupled with widening discounts for Indonesian domestic trade ore. The ore market has fully shifted to a buyer's market, continuing to trend downward to find a bottom. In NPI, falling ore prices pushed cost support lower. Although rumors of production cuts at Indonesian ferroalloy plants persist, under high inventories and aggressive price-pressing by steel mills, the transaction center continued to shift down. In intermediates, MHP and high-grade nickel matte discount coefficients returned to a downward channel after a brief stabilization. Downstream ternary precursor demand is weak, spot purchasing has stalled, and buyers hold a firm stance on pressing prices. In refined nickel, the main contract completed its rollover during the week. Spot premiums/discounts first dipped and then rebounded. Downstream end-use demand remains weak, purchasing maintains a just-in-time pace, domestic social inventory accumulated slightly month-on-month, and overall trading sentiment is light.
Overall, the current loose supply-demand fundamental pattern in the nickel market remains unchanged. Indonesian production cut news remains at the expectation level, with its marginal boosting effect on the futures market diminishing. Meanwhile, both stainless steel and new energy sectors on the demand side are weak, making it difficult to effectively drive prices up. On the cost side, with the continuous loosening of ore and intermediate prices, the floor support for nickel prices has shifted lower.
Next week, the SHFE nickel main contract is expected to maintain a weak and rangebound trend, with a temporary trading range of Yuan 115,000-120,000/t. Going forward, key focus areas include: the actual execution and data verification of joint supply-side production cuts, marginal changes in downstream stainless steel production schedules and new energy orders, and the disturbance of the Fed's subsequent rate hike path on macro sentiment.
