Nickel futures on the Shanghai market saw narrow-range, sideways movement in the afternoon session. The main July 2026 contract opened at 135,870 yuan per tonne, reached an intraday high of 136,240 yuan, a low of 135,280 yuan, and finally settled at 135,740 yuan, marking a slight decline of 20 yuan or 0.04%. Trading volume for the July contract stood at 149,119 lots.

Market data indicates that the average price for #1 nickel on June 17th was 136,550 yuan per tonne, representing an increase of 250 yuan from the previous day. Spot prices in the Yangtze River region averaged 136,550 yuan per tonne, up 200 yuan, while spot prices in Guangdong averaged 137,450 yuan per tonne, showing a more significant gain of 550 yuan.

Key Macroeconomic Influences at Play

The market is bracing for the upcoming Federal Reserve policy meeting on June 17th-18th. Stronger-than-expected US employment and CPI data for May have fueled hawkish expectations, which could push the US dollar and Treasury yields higher, thereby pressuring base metals. Concurrently, the European Central Bank's rate hikes and a sluggish manufacturing sector in the Eurozone are dampening demand for metals on the LME. Domestically, supportive policies are evident, with new mining regulations tightening supply for strategic metals, and massive infrastructure spending alongside the phase-out of high-energy-consuming capacity supporting prices for copper, aluminum, and steel. However, the manufacturing, property, and electric vehicle sectors are entering a seasonal lull, leading to subdued downstream restocking. Profit-taking by longs, pre-holiday capital flight ahead of the Dragon Boat Festival, and increased supply from overseas mines are intensifying the tug-of-war between bulls and bears, suggesting metals will likely continue trading within a range in the near term.

Divergence in Nickel Feedstock Supply and Demand

The supply of laterite nickel ore is constrained by tightened annual mining quotas in Indonesia, leading to tight availability of high-grade ore, with incremental supply from the Philippines only partially offsetting the shortfall. Sulfide nickel ore resources remain scarce, keeping supply stable. Output of nickel matte has increased slightly, but insufficient downstream production line adaptation has resulted in thin trading. Nickel-cobalt hydroxide production is hampered by a shortage of sulfur, supporting prices for intermediate products. Ample supply of recycled nickel continues to weigh on spot prices at the lower end. This divergence across the supply chain is evident as stainless steel mills reduce production schedules, and new energy ternary material producers maintain conservative restocking strategies during the off-season. Overall demand lacks the sustained momentum to drive prices significantly higher.

Thin Spot Trading and Pre-Holiday Caution

Spot market activity contracted notably today. Traders focused on destocking to mitigate risk, with only minimal restocking to meet immediate needs. Speculative purchasing has largely stalled. Premiums and discounts remained within a narrow range, with limited room for price negotiation between upstream and downstream participants. The absence of concentrated buying activity, coupled with persistently high inventory levels, continues to cap the upside for spot prices. This thin trading is exacerbating the range-bound characteristics of the futures market.

Outlook for Nickel Prices Ahead of the Holiday

In the short term, the market will closely monitor three key variables: the details of the US-Iran agreement, the tone of Federal Reserve officials regarding interest rates, and the movement of the US Dollar Index. While geopolitical de-escalation could benefit metals, persistent expectations of delayed interest rate cuts due to high inflation continue to cap upside potential. Nickel prices are expected to continue their narrow-range oscillation from the evening of June 17th into June 18th. Upward movement will be constrained by a strong US dollar and high inventories, while downside will find support from nickel ore costs and hydrometallurgical production expenses. A clear unilateral trend is unlikely to emerge, suggesting a trading strategy focused on range-bound fluctuations is most appropriate.