Interweaving long and short, exploring the decline in nickel prices

Price trend (6.9-6.17)

According to the monitoring of the commodity market analysis system of Shengyi Society, on June 17th, spot electrolytic nickel was reported at 120008 yuan/ton, with a weekly decline of 3.32% and a year-on-year decline of 13.15%. The loosening of policies in the Philippines has intensified expectations of oversupply, while the actual supply bottleneck and cost support in Indonesia have led to pressure and volatility in nickel prices due to a combination of bullish and bearish factors.
Macro level suppression of demand expectations
1. US imposed tariffs: The tariff escalation on steel derived products (household appliances) directly suppresses the demand for stainless steel, and about 70% of nickel’s end consumption comes from the stainless steel field, with obvious negative transmission.
2. Weakness in domestic manufacturing industry: The decline in manufacturing output growth in May reflects weak demand for industrial metals, but retail data exceeded expectations, indicating consumer resilience. Policy stimulus expectations may slow down the decline.
3. The disappearance of geopolitical risk premium: The situation in the Middle East has caused greater disturbance to the crude oil market, and nickel, as an industrial metal, is more concerned with actual supply and demand. The short-term impact of geopolitical factors is limited.
Supply side: long short game
The Philippine Senate Committee has decided to remove the ban on raw ore exports from the final version of the Mining Fiscal System Act, exacerbating expectations of oversupply.
At present, Indonesia has issued a quota of about 300 million wet tons, but due to the mismatch between the actual shipping capacity and production capacity of most mines, as well as the continuous rainy weather in Indonesia, the actual shipping volume is lower than expected.
Cost support: The benchmark price for domestic trade in June (Phase II) is expected to drop by around 0.3-0.5 US dollars. The decline is limited, and high cost mines still have the willingness to raise prices.
Inventory changes: LME nickel inventory increased by 5844 tons to 204936 tons during the cycle, and domestic Shanghai nickel inventory increased by 1049 tons to 22241 tons during the cycle. Global inventory growth is significant, and the pattern of oversupply continues.
Demand side: Weakening of dual lines
Stainless steel market: On June 17th, the spot price of stainless steel was reported at 12916 yuan/ton, with a weekly decline of 1.4%. The production of stainless steel in June decreased by 2.91% month on month, putting pressure on accumulated inventory and sluggish terminal demand.
In the field of new energy, lithium iron phosphate batteries are squeezing the share of ternary batteries, leading to a slowdown in demand growth.
Market forecast: Inventory pressure, poor demand, firm costs, attention to macro and policy information, expected nickel prices to remain range bound.