Nickel futures market: Persistent tensions in the Middle East have triggered concerns over sulfur supply tightness, coupled with ongoing compliance rectifications in Indonesia's mining sector. Overnight, LME nickel closed up by 1.21%. The latest LME nickel settlement price was $18,780, an increase of $225 per tonne from the previous trading day, with a trading volume of 11,695 lots. In the domestic market, the overnight session of SHFE nickel settled at 143,270 yuan per tonne, rising by 560 yuan, or 0.39%.
As of May 19, LME nickel inventories were reported at 276,096 tonnes, an increase of 534 tonnes from the previous day.
Market analysis indicates that SHFE nickel futures opened higher across the board today. The main contract for June 2024 opened at 146,000 yuan per tonne, up by 3,290 yuan from the previous close. By 9:10 a.m., the main June 2024 contract was quoted at 143,270 yuan per tonne, an increase of 560 yuan. SHFE nickel opened higher and initially moved upwards, with the overall market maintaining high-level volatility. From a macro perspective, in the early hours of May 20 Beijing time, global industrial metals experienced a broad decline, yet LME nickel significantly bucked the trend, becoming the only base metal on the London Metal Exchange to close in positive territory. Against a backdrop of systemic risk impacts, including the 30-year U.S. Treasury yield surging to its highest level since the financial crisis, a strengthening U.S. dollar index, and declines across all three major U.S. stock indices, LME nickel demonstrated an independent upward trajectory, highlighting the robust resilience underpinned by its fundamental factors.
The ability of LME nickel to act as a "contrarian" amid the sell-off in risk assets stems from a dual drive of both external macro conditions and internal fundamentals. Externally, heightened expectations for Federal Reserve interest rate hikes have led markets to preemptively bet on a hawkish signal from the upcoming release of monetary policy meeting minutes, triggering a broad sell-off in global risk assets. However, for the nickel market, strong expectations of supply shortages have completely overshadowed the systemic negative impacts from the macro environment. Internally, the regulatory storm over nickel mining in Indonesia continues to unfold, with the effects of the suspension of 34 nickel mining projects still lingering. Compounded by a recent sharp surge in sulfur prices significantly raising the costs of hydrometallurgical processing, expectations for a contraction in global nickel supply are continuously strengthening.
A panoramic view of the industry chain reveals a distinct pattern of "supply contraction across all segments." At the ore stage: laterite nickel ore supply is tight due to Indonesian policy restrictions, while sulfide nickel ore faces growth challenges from declining grades and insufficient capital expenditure. For intermediate products: the production growth rate of nickel matte is slowing, and nickel-cobalt hydroxide (MHP) is experiencing widespread production cuts due to sulfur shortages. At the smelting stage: more maintenance shutdowns are occurring at electrolytic nickel enterprises, and there is insufficient supply of recycled nickel raw materials. Downstream: demand resilience remains strong in the stainless steel and power battery sectors, providing support for the floor of nickel prices.
Short-term trend forecasts and key focal points: Today's market focus will center on the release of the Federal Reserve meeting minutes. If the data indicates a cooling labor market, it could strengthen market expectations for interest rate cuts, providing upward momentum for nickel prices. From a technical perspective, nickel prices are currently in an adjustment phase. Influenced by bearish macro sentiment, nickel prices are more likely to experience range-bound fluctuations with a downward bias today. Key support below is seen at 142,500 yuan per tonne, with resistance above at 145,000 yuan per tonne.
It is anticipated that nickel prices will maintain a range-bound, slightly stronger pattern in the short term. The lower bound is strongly supported by raw material cost lines, while the upper bound is constrained by weak seasonal consumption and inventory pressures. Investors should closely monitor changes in Indonesia's mining policies and the recovery of sulfur supply conditions.
(Note: This is an original analysis for reference only and does not constitute investment advice.)