Nickel inventory on the Shanghai Futures Exchange (SHFE) stood at 99,097 tonnes as of the week ending July 10th, marking a weekly decrease of 2,525 tonnes and continuing the destocking trend. Concurrently, the average spot price for Yangtze River 1# nickel was quoted at 130,050 yuan per tonne, an increase of 1,200 yuan. The combination of these two data points presents an intriguing market picture.
The most recent price for SHFE nickel futures contracts is 129,330 yuan per tonne, up 630 yuan (as of the midday session, before market close). The spot price remains approximately 720 yuan per tonne higher than the futures price, indicating the persistence of a spot premium structure. This suggests ongoing tightness in the nearby market, with the price structure yet to reverse.
In absolute terms, the SHFE nickel inventory of 99,097 tonnes remains at a relatively high level. The destocking trend reflects a tightening in the circulation pipeline rather than a significant acceleration in end-consumer demand. Therefore, the price-suppressing effect of the inventory has not been fully alleviated, which may constrain the potential height of any price rebound.
The trading range for Yangtze River 1# nickel spot was between 128,850 and 131,250 yuan per tonne, a fluctuation of about 1,400 yuan. Spot prices are demonstrating greater elasticity than futures, indicating that immediate physical buying is more sensitive to supply-side disruptions at the mining level. This suggests that pricing power in the near term currently resides with the spot market.
The average price for nickel sulfate remained flat at 33,100 yuan per tonne. The stagnant demand for nickel salts means that the effects of destocking and price increases are not being fully transmitted downstream. The lack of supportive demand-side factors makes the sustainability of the spot premium expansion questionable, as a basis convergence lacks the necessary demand-side impetus.
Recent reports indicate that the market price for Indonesian nickel ore is trading at a discount to benchmark prices, exacerbating difficulties for small and medium-sized miners and increasing supply uncertainty. While supply-side variables at the mining level provide a narrative to support the inventory drawdown story, the resolution of these contradictions will take time, and excessive extrapolation should be avoided.
If the destocking trend continues alongside an expansion of the spot premium, support for nearby prices may strengthen. Conversely, if inventories begin to rise, the basis (the spot-futures spread) is likely to narrow. Moving forward, close attention should be paid to weekly inventory data and changes in the spot premium/discount, as these structural signals are more meaningful for gauging market direction than single-day price movements.