Nickel futures on the Shanghai market saw a slight uptick in the afternoon session today. The most active July 2024 contract (2607) opened at 136,860 yuan per tonne, reaching an intraday high of 136,910 yuan and a low of 134,740 yuan. It closed at 135,870 yuan, marking an increase of 540 yuan, or 0.4%. Trading volume for the July contract stood at 169,411 lots.

According to statistics, the comprehensive 1# nickel price on the Changjiang Nonferrous Metals Network on June 16th was quoted between 135,150 and 137,450 yuan per tonne, with an average price of 136,300 yuan, down 250 yuan from the previous day. The spot price for 1# nickel in the Changjiang market ranged from 135,350 to 137,350 yuan per tonne, averaging 136,350 yuan, a decrease of 200 yuan. In Guangdong, the spot nickel price was quoted between 136,700 and 137,100 yuan per tonne, with an average of 136,900 yuan, down 800 yuan from the day before.

Key Macroeconomic Influences

The US and Iran have reached a memorandum of understanding on a ceasefire, with the signing ceremony set for June 19th in Geneva. The Strait of Hormuz is gradually reopening to navigation, and the European Union is considering easing sanctions on Iran. Crude oil prices plummeted by over 4% as fears of a global energy supply disruption dissipated, simultaneously easing inflationary pressures. The recent G7 summit focused on stabilizing energy prices, cross-border AI regulation, and global monetary policy, with several countries coordinating to adjust energy reserves.

Domestically, the central bank has injected substantial liquidity to counterbalance mid-year bond issuance pressures, keeping funding conditions ample. Multiple government departments have implemented energy-saving, carbon-reduction, and new energy heavy-duty truck support policies, bringing policy tailwinds to industrial sectors. External risk appetite has increased, with European and US stock markets rallying collectively and US Treasury yields declining. Market divergence centers on the higher-than-expected US inflation data. The upcoming Federal Reserve policy meeting on the 18th is under close scrutiny; while expectations for a rate cut have risen, hawkish risks remain, keeping valuations for bulk commodities under pressure in the near term.

Diverging Supply and Demand Across Nickel Raw Materials

The supply of laterite nickel ore from the Philippines has increased, leading to a buildup in port inventories and a looser supply situation. However, quota tightening in Indonesia is supporting the price floor for domestic ore. Sulfide nickel ore resources are relatively tight, making it more difficult for smelters to replenish stocks. A small shift in high-grade nickel matte production capacity has diverted some supply, leading to a contraction in circulating volumes. The production cost for nickel-cobalt hydroxide has risen due to high sulfur prices, putting pressure on the profitability of hydrometallurgical plants. Meanwhile, the supply of recycled nickel scrap has increased, diverting some consumption away from primary nickel. The entire chain presents a divergent picture: structural tightness in upstream mining, high costs for intermediate products in the midstream, and weakening downstream demand, with no clear one-sided driver for supply or demand.

Sluggish Spot Trading with Purchases Limited to Essential Needs

High price volatility on the futures market has dampened trading sentiment. Traders are offering discounts to move inventory, while downstream steel mills and battery companies are making only small, need-based purchases. Many are waiting on the sidelines for a price correction. Spot premiums continue to narrow, and overall trading activity remains subdued, with no signs of concentrated stockpiling.

Macro Focus and Nickel Price Outlook for June 16-17

In the short term, the market is closely watching three key variables: upcoming US inflation-related data, statements from Federal Reserve officials, and geopolitical shipping developments. If the US dollar continues to strengthen, the lower bound of nickel prices will face pressure. If inflation cools and risk sentiment improves, cost-side factors will provide a floor for prices. It is anticipated that LME nickel and SHFE nickel will continue to trade within a narrow range from the evening of the 16th through the 17th, with a low probability of significant one-sided moves. The upside is limited by macroeconomic pressures, while the downside finds support from mining and hydrometallurgical costs. Trading strategies should focus on range-bound operations.