Shanghai nickel futures edged higher in the afternoon session. The main June 2024 contract (2606) opened at 145,280 yuan per tonne, reached an intraday high of 147,500 yuan, a low of 144,530 yuan, and closed at 147,190 yuan, up 250 yuan or 0.17%. Trading volume for the main contract stood at 274,772 lots.
According to data from the Changjiang Nonferrous Metals Network, the average price for Changjiang Comprehensive 1# nickel on May 13th was 147,650 yuan per tonne, up 1,350 yuan from the previous day, with a range of 146,650 to 148,650 yuan per tonne. Spot prices for Changjiang 1# nickel averaged 147,800 yuan per tonne, rising 1,700 yuan, with a range of 147,200 to 148,400 yuan. In contrast, spot nickel prices in Guangdong averaged 148,750 yuan per tonne, down 800 yuan, within a range of 148,550 to 148,950 yuan.
Market analysis indicates that, on the macro front, the unexpected rise in the US CPI for April has significantly delayed market expectations for a Federal Reserve rate cut, leading to a stronger US dollar index and a mixed performance in US equities, which has somewhat tempered global risk appetite. However, nickel prices have not been pressured by the stronger dollar. Instead, they have found support from offsetting domestic and international macro factors: China's ongoing pro-growth policies and rising demand expectations from the downstream new energy industry chain have partially counteracted the pressure from overseas monetary tightening.
On the supply side, signals of tightening supply are intensifying. Indonesia, a major producer of laterite nickel ore, has significantly reduced its mining quotas. Concurrently, a global sulfur shortage is pushing up smelting costs, constraining the release of nickel pig iron and nickel matte capacity. Supply growth from sulfide nickel ore remains sluggish. The availability of intermediate products like mixed hydroxide precipitate (MHP) is tight, and recycled nickel output is also limited by scarce raw materials. Supply constraints across the entire industry chain, from raw materials to finished products, have shifted from expectation to reality.
Regarding spot trading and positioning, the main Shanghai nickel contract experienced sharp fluctuations at high levels, maintaining active trading with intense speculative activity. Divergence in market positions has widened, with some profit-taking observed. In the spot market, a tight balance between supply and demand has led to limited availability. While rigid demand provides support, high prices are also prompting caution among buyers. The divergence in market premiums and discounts reflects varying levels of acceptance for high prices. Future attention should be paid to fund flows and changes in spot transaction volumes.
In the near term, market focus on May 13th-14th will be on speeches from Federal Reserve officials, fluctuations in the US dollar index, and policy developments in Indonesia. Given the tight supply-demand balance, nickel prices are likely to remain strong with volatility in the short term, though caution is warranted regarding sentiment shifts triggered by a potential dollar rebound. Overall, nickel pricing has transitioned from a past phase of surplus to a new stage defined by a tight supply-demand balance. Subsequent market movements will depend heavily on the actual realization of supply constraints and marginal changes in downstream demand.