Nickel prices on the Shanghai Futures Exchange experienced a slight uptick on the 23rd, with market sentiment dominated by caution and trading activity remaining subdued.

Shanghai Nickel Futures Performance

In the afternoon session, Shanghai nickel futures traded within a range before declining. The most active July 2024 contract (2607) opened at 136,080 yuan per tonne, reached a high of 136,080 yuan, and fell to a low of 132,400 yuan before closing at 132,400 yuan. This represented a drop of 2,260 yuan, or 1.68%, from the previous close. Trading volume for the July contract was 143,912 lots.

Spot Market Prices

According to market data, the average price for 1# nickel on the 23rd was reported at 134,550 yuan per tonne, marking an increase of 400 yuan from the previous day. The price range was between 133,750 yuan and 135,350 yuan. In the Guangdong spot market, the average price for nickel was 135,650 yuan per tonne, up by 600 yuan, within a range of 135,450 yuan to 135,850 yuan.

Macroeconomic Influences

The market opened with a brief surge in nickel prices, driven by a temporary improvement in risk sentiment following eased US-Iran tensions. However, the rally was short-lived. A more hawkish tone from the Federal Reserve strengthened the US dollar, which held firmly above the 100 mark. Concurrently, a sharp sell-off in US technology stocks led to a broader weakening of global risk assets, prompting capital outflows from the non-ferrous metals sector and causing nickel prices to reverse gains and decline rapidly. The primary external headwind remains heightened expectations for interest rate hikes, which continue to pressure US dollar-denominated metals. Domestically, the pace of manufacturing recovery has been moderate, with subdued expectations for industrial demand. This combination of internal and external macro factors has weighed on the futures market.

Supply, Demand, and Industry Chain Dynamics

Across all nickel raw material categories, the supply chain is facing specific pressures. Shipment cycles for laterite nickel ore have lengthened, slowing the release of incremental supply. Output and circulation of sulfide nickel ore remain stable. High-grade nickel matte is readily available and has become the primary raw material for refined nickel production. Mixed Hydroxide Precipitate (MHP) production is being constrained by a shortage of sulfur, leading to reduced operating rates at hydrometallurgical plants. While recycling capacity for secondary nickel is sufficient, the limited flow of scrap material restricts its contribution. The overall industry chain is characterized by a contradictory landscape: high smelting costs persist upstream, downstream stainless steel mills are cutting production during the off-season, demand growth from the battery sector is insufficient, and inventories continue to accumulate in both domestic and international warehouses.

Spot Trading Activity Amid Price Decline

Following the rapid downturn in futures prices, traders have adopted a strong wait-and-see stance. Purchasing activity is limited to sporadic, essential needs from downstream users, with speculative stockpiling having completely halted. Spot market transaction enthusiasm has cooled significantly. Both upstream and downstream participants show little willingness to lock in prices, leading to widening fluctuations in premiums and discounts. Overall market trading activity has fallen to a low point for the current period.

Short-Term Outlook and Key Factors

Market attention for the immediate future is focused on three key variables: the continued strength of the US dollar index, upcoming speeches on monetary policy by overseas officials, and developments regarding Indonesia's nickel ore quota policy. In the short term, macroeconomic headwinds are expected to remain dominant. However, raw material costs are providing a floor for prices. Nickel prices are likely to continue fluctuating within a range with a weak bias. A sustained upward move lacks the necessary drivers from both capital flows and demand, while downside potential is constrained by mining and smelting costs, making a significant one-directional trend less probable.