On July 6, 2026, the main nickel futures contract on the Shanghai Futures Exchange opened at 126,770 yuan per metric ton and closed at 126,890 yuan per metric ton, representing a change of 0.09% from the previous trading day's close. The daily trading volume was 243,393 lots, a decrease of 23,966 lots, while open interest increased by 8,592 lots to 224,655 lots.

Market Dynamics for Nickel

Nickel is currently in a state of contention between policy factors and fundamental supply-demand dynamics. On the policy front, attention is focused on potential mid-term quota adjustments in Indonesia. The Indonesian Ministry of Energy and Mineral Resources has publicly stated that there are currently no formal quota adjustments, pending official evaluation and review. Any additional quotas will require integrated smelting capacity within Indonesia and will be reviewed on a company-by-company basis. All RKAB (Work Plan and Budget) quotas in Indonesia have been approved, and Indonesian mining companies are required to submit revision applications by July. Vale is reportedly planning to apply for an increase in its RKAB mining quota, and PT COR plans to revise and supplement its quota to 4 million metric tons. The Indonesian Minister of Mining has indicated that the country might relax mining production quotas if prices are favorable. The Indonesian government has also canceled a mining profit-sharing plan. Furthermore, Indonesia has established a state-owned enterprise, DSI, to coordinate the entire export process for palm oil, coal, and ferroalloys (including nickel pig iron, but excluding ferronickel).

On the fundamental supply side, sulfur prices have begun to decline. Although an agreement has been reached in the Middle East, the short-term price center is still difficult to lower. MHP (Mixed Hydroxide Precipitate) production has encountered some obstacles, keeping prices strong. On the demand side, stainless steel consumption has entered a seasonal lull. Steel mills have weak purchasing intentions, and actual transactions remain limited, with no significant volume increase. The current focus is on consuming inventory built up from previous concentrated restocking, and acceptance of high-priced nickel pig iron is limited. In the new energy sector, production and sales of new energy vehicles are in line with expectations but are also in a seasonal lull, showing limited month-on-month improvement. Ternary cathode material production in May increased by 6.43% month-on-month, contributing to demand growth. However, in the spot market, downstream companies have weak purchasing intentions, primarily buying for immediate needs. Domestic nickel inventories continue to accumulate, putting pressure on the upside potential for prices.

Nickel Ore Market

According to Mysteel data, for Indonesian domestic trade ore, the CIF price for Ni:1.6% grade is quoted at $70.64 per wet metric ton, unchanged from the previous period. However, Indonesian nickel ore prices for July have already fallen by approximately $5 per wet metric ton, and domestic trade premiums are also nearing their bottom. Philippine nickel ore prices remain stable. CIF quotes from Lianyungang show Ni:0.9% and Ni:1.3% grades quoted at $38 and $49 per wet metric ton, respectively, both unchanged from the previous trading day.

Spot Market Conditions

This week, port inventories of nickel ore increased by 5.80%, while warehouse inventories of refined nickel decreased by 1.77%. Trading of refined nickel was fair, with premiums stable to slightly higher. The premium for Jinchuan Group's ex-factory price over Shanghai nickel futures has recovered. Warehouse receipts and social inventories on the Shanghai Futures Exchange continue to accumulate. SHFE warehouse receipts stand at 98,052 metric tons, approaching 100,000 metric tons, with weak destocking momentum. Specifically, the premium for Jinchuan nickel changed by 50 yuan to 2,300 yuan per metric ton, the premium for imported nickel remained unchanged at -50 yuan per metric ton, and the premium for nickel beans is 50 yuan per metric ton. The previous trading day's Shanghai nickel warehouse receipt volume was 98,052 metric tons, a decrease of 5 metric tons, while LME nickel inventories were 274,620 metric tons.

Macroeconomic Environment

US non-farm payrolls increased by 57,000 in June, significantly below market expectations of 113,000 and a previous figure of 172,000. Federal Reserve Governor Kevin Warsh noted that inflation risks have subsided but would not provide forward guidance on future interest rate policy. The situation in the Middle East remains contested. Shipping through the Strait of Hormuz has not fully resumed, with several vessels rerouted as required by Iran. Sulfur prices have retreated but are expected to support the price center in the short term.

Trading Strategy for Nickel

The current supply and demand situation, while persistently weak, aligns with expectations. Policy and macroeconomic factors have become the primary drivers of nickel price movements. The easing of tensions in the Middle East, potential policy relaxation in Indonesia, and high volatility in the US dollar are creating bilateral pressure on nickel prices, making a clear, one-sided trend unlikely. Prices are expected to maintain a fluctuating pattern.

Single Futures Strategy: Primarily range-bound trading.

Inter-Contract Strategy: None.

Inter-Commodity Strategy: None.

Futures-Spot Arbitrage: None.

Options Strategy: None.

Key Risks

Changes in domestic economic policies, changes in Indonesian policies, and inconsistent statements from the US President.

Stainless Steel Market Analysis

On July 6, 2026, the main stainless steel futures contract opened at 14,545 yuan per metric ton and closed at 14,740 yuan per metric ton. The daily trading volume was 327,821 lots, an increase of 199,627 lots, while open interest decreased by 4,171 lots to 92,277 lots.

Fundamental Outlook for Stainless Steel

Fundamentally, the EU's new steel trade mechanism has been implemented, setting stainless steel quotas, increasing tariffs outside quotas, and establishing "smelting and pouring" rules of origin restrictions. The State Council issued the "15th Five-Year Plan for Urban Renewal," guiding the composite transformation of urban construction and promoting trillions in investment for urban renewal. On the supply side, steel mills' high production plans have slightly decreased. The total domestic crude stainless steel production schedule for June is estimated at 3.6043 million metric tons, a month-on-month decrease of 5.56% but a year-on-year increase of 9.5%, indicating a slight supply contraction. The Ministry of Industry and Information Technology released new regulations on steel capacity replacement, including stainless steel in unified steel capacity assessments for the first time and raising the national unified replacement ratio to no less than 1.5:1. This optimizes supply-side capacity, accelerates the elimination of outdated capacity, alleviates low-price competition, and supports prices. On the demand side, the market has entered the traditional off-season for stainless steel. Market transactions are light, forward orders are weak, and destocking momentum is insufficient. In May, China's stainless steel imports were 91,100 metric tons, a decrease of 78,600 metric tons or 46.33% month-on-month, and a decrease of 34,000 metric tons or 27.18% year-on-year. Traditional sectors lack significant restocking momentum, and demand remains primarily for immediate needs.

Stainless Steel Spot Market

Futures prices fluctuated with a slight recovery, while spot quotations remained relatively firm. Market sentiment was average, with procurement mainly for immediate needs. Trading was stable to slightly weak, and inventory destocking has stalled. The stainless steel price in the Wuxi market is 15,050 yuan per metric ton, unchanged, while the price in the Foshan market is 15,075 yuan per metric ton, also unchanged. The premium for 304/2B cold-rolled sheets ranges from 245 to 795 yuan per metric ton. According to SMM data, the previous day's average ex-factory tax-included price for high-grade nickel pig iron changed by 0.50 yuan per nickel point to 1,133.5 yuan per nickel point.

Trading Strategy for Stainless Steel

Fundamentally, supply growth expectations are stronger than demand, but cost support remains. Macroeconomic and policy influences have become the main drivers of stainless steel price movements. In the short term, stainless steel is expected to continue following nickel price trends and maintain a fluctuating pattern.

Single Futures Strategy: Neutral.

Inter-Contract Strategy: None.

Inter-Commodity Strategy: None.

Futures-Spot Arbitrage: None.

Options Strategy: None.

Key Risks

Changes in domestic economic and property policies, changes in Indonesian policies, and inconsistent statements from the US President.