Macro game: Nickel prices fluctuate in July

Price trend:

According to the monitoring of the commodity market analysis system of Shengyi Society, on July 29th, spot electrolytic nickel was reported at 122683 yuan/ton, with a weekly increase of 0.81% and a year-on-year decrease of 4.03%.
Rising at the beginning of the month: The disturbance of Indonesia’s nickel ore quota policy, coupled with the decline in LME and domestic inventories, supported the short-term rebound of nickel prices.
Mid month oscillation: Trump’s tariff threat, rising macro risk aversion, coupled with weak demand, suppresses rebound momentum.
At the end of the month, there was a surge and a decline: the domestic “anti internal competition” policy stimulated the sentiment of industrial products. On July 24th, nickel prices hit a high point of the month, and the sentiment gradually dissipated. Recently, nickel prices have fallen sharply.
Macro level: Interweaving of long and short positions, intensifying market competition
Positive factors
Domestic policy support: The Ministry of Industry and Information Technology will launch a stable growth plan for the steel and non-ferrous industries, emphasizing the elimination of outdated production capacity and boosting market expectations for supply side reforms. The completion of negotiations on the China ASEAN Free Trade Area 3.0 has benefited the circulation of regional raw materials. The manufacturing PMI rebounded to 49.7% in June, and the new order index expanded, indicating a marginal recovery in the manufacturing industry.
Overseas negative pressure suppression
US tariff shock (core negative): Trump announced the imposition of 15% -40% tariffs on multiple countries starting from August 1st, leading to a rise in market risk aversion. If Russia and Ukraine fail to reach an agreement, the United States may impose 100% tariffs and secondary sanctions on Russia, further disrupting global trade.
The expectation of a Fed interest rate cut has cooled down: the annual CPI rate rose to 2.7% in June, and the core CPI rose to 2.9%. The market’s probability of a rate cut in September has decreased from 65% to 58%, and the strengthening of the US dollar has suppressed metal prices.
Supply side: Indonesia’s policy game+loosening of mineral prices
Indonesian nickel ore quota: 360 million tons have been approved, but only 120 million tons were consumed in the first half of the year, weakening the willingness of mines to raise prices.
Supply recovery in the Philippines: With the end of the rainy season and an increase in nickel ore shipments, Chinese port inventories have accumulated. The FOB price for 1.3% grade nickel ore is $31 per wet ton, a month on month decline.
Cost side decline: Indonesia’s nickel ore domestic trade benchmark price decreased by 1.8% in July, while the price of nickel ore in the Philippines weakened, resulting in an improvement in smelting profit margins.
Inventory changes: LME nickel inventory increased by 906 tons to 204912 tons during the cycle, while domestic Shanghai nickel inventory increased by 659 tons to 21880 tons during the cycle. Global inventory has shown significant growth, and the surplus pattern has not changed.
Demand side: Stainless steel off-season+new energy substitution suppression
Stainless steel industry: In July, high temperatures suppressed demand, resulting in a 2.87% decrease in production schedules for 43 stainless steel plants compared to the previous month, with limited support for nickel demand.
Policy support: Multiple departments are cracking down on “internal competition”. On July 29th, the benchmark price of stainless steel was 13017.50 yuan/ton, a monthly increase of 1.9%, but inventory turnover is slow.
New energy (ternary batteries): Subsidies for new energy vehicles will continue, but the proportion of lithium iron phosphate (LFP) batteries will increase, weakening the increase in nickel consumption.
Future outlook:
The nickel price is still dominated by macro and policy factors, and may continue to fluctuate weakly in the short term. Pay attention to the Federal Reserve’s movements in August and the effectiveness of domestic policies.