Market Performance: Shanghai nickel futures trended lower in afternoon trading. The main contract for June 2024 (2606) opened at 146,900 yuan per tonne. During the session, it reached a high of 147,880 yuan/tonne and a low of 143,940 yuan/tonne, ultimately closing at 144,470 yuan/tonne. This represents a decline of 1,680 yuan, or 1.15%. Trading volume for the June 2024 main contract was 294,404 lots.

Price Statistics: According to data, the quoted price for Yangtze River Comprehensive 1# nickel on May 14th ranged from 144,800 to 146,900 yuan/tonne, with an average price of 145,850 yuan/tonne, down 1,800 yuan from the previous day. The spot price for Yangtze River 1# nickel was quoted between 145,200 and 146,600 yuan/tonne, averaging 145,900 yuan/tonne, a decrease of 1,900 yuan. In Guangdong, the spot nickel price ranged from 147,550 to 147,950 yuan/tonne, with an average of 147,750 yuan/tonne, down 1,000 yuan.

Market Analysis: Nickel prices experienced a brief rally in early trading on May 14th before quickly retreating, maintaining a downward trajectory throughout the day. This price action reflects a tug-of-war between a strong US dollar applying downward pressure and tightening raw material supply. A rally in US tech stocks bolstered overall market risk appetite, but rapidly widening divergences between bullish and bearish positions led to concentrated profit-taking by market funds, directly triggering the price correction. Expectations for tighter global monetary policy are weighing on industrial metals, though rising energy costs are providing a slight counterbalance. Domestically, expectations for economic stabilization are growing, and nickel ore supply from major producing regions is tightening. However, high social inventories combined with a seasonal lull in downstream consumption are further limiting upward momentum for nickel prices.

Domestic supply of refined nickel remains generally ample, with the industry maintaining a tight equilibrium. On the raw material front, policy-driven quota tightening in major lateritic nickel ore-producing countries and sluggish supply growth for sulfide nickel ore have led to a constrained flow of nickel intermediates like nickel matte and nickel-cobalt hydroxide. Feedstock for recycled nickel is also tight, with recycling volumes struggling to increase and processing costs continuing to rise. The industry has formed a complete closed-loop from mining and smelting to stainless steel and battery sectors. Production capacity adjustments in key regions are pushing up overall costs, while rising prices for auxiliary raw materials are further increasing the burden on smelters, highlighting structural supply-demand imbalances within the industry. Downstream rigid demand provides a floor for nickel prices.

Spot Trading: Sentiment has turned cautious, leading to subdued trading activity. Funds in Shanghai nickel futures are largely exiting positions, with open interest declining and the divergence between long and short positions intensifying. Trading has been dominated by short-term, range-bound activity, lacking a clear directional catalyst. The spot market has cooled in tandem, with traders offering lower prices. Downstream buyers are only making purchases to meet immediate needs, showing little willingness for speculative stockpiling. Under this linkage between futures and spot markets, overall trading activity remains light.

Short-term Outlook: The short-term volatile pattern for nickel prices is unlikely to change, with the overall trend being macro-driven. The market is closely focused on upcoming speeches from Federal Reserve officials, US retail sales data, and the release of domestic industrial output figures. Developments regarding the resumption of operations at overseas mines and regional geopolitical situations are also being monitored. In the near term, nickel prices are expected to remain weak with a volatile bias. The trajectory of the US dollar is the core influencing variable; a stronger dollar could easily push prices down to test support levels. A recovery in the tech sector's fortunes, underpinned by new energy demand, could help limit the extent of any declines. Tightening raw material supply provides underlying support, but macro uncertainties and inventory pressure are capping the upside. The tug-of-war between bullish and bearish forces in the market is set to continue. A cautious, wait-and-see approach is advised for risk management.