1、 Trend analysis
Nickel prices have slightly decreased this week. As of the weekend, the spot nickel price was 127750 yuan/ton, down 2.27% from the beginning of the week and up 4.66% year-on-year.
Macro wise: This week, the macro drivers have gradually exhausted. The US July CPI data is basically in line with expectations, and the Federal Reserve maintains a wait-and-see stance; CME Federal Reserve observation shows that the probability of a rate hike in September has dropped to 33.1%. The situation in the Middle East shows some signs of easing, but navigation in the Strait of Hormuz has not fully resumed, and sulfur prices continue to fluctuate at high levels around $1100. In July, the domestic CPI increased by 0.5% year-on-year, and M2 increased by 7.7% year-on-year. The macro atmosphere is cautiously optimistic, but concerns about economic recession still exist.
On the supply side, the focus of the supply side game is on Indonesia’s RKAB quota policy. On Thursday, the Indonesian Nickel Miners Association (APNI) recommended an additional strategic buffer of 30 million tons for nickel ore RKAB in 2026, raising market expectations for loose supply. In terms of mining, the end of the rainy season in the Philippines has led to a rebound in domestic nickel ore port inventories, but Indonesia’s intermediate goods imports have shown a month on month decrease. Domestic refined nickel production in July continued to decline at 30800 tons, and Indonesia’s GNI company shut down two of its three nickel smelters due to financial crisis.
On the demand side: Overall demand is still in a weak trend during the off-season. Under the off-season of traditional stainless steel consumption, the terminal demand is weak, and downstream acceptance of high priced resources is limited. Transactions have only rebounded temporarily, and steel mills have loosened their prices; The stainless steel factory lacks strong motivation to replenish inventory in large quantities before the peak season arrives. In terms of new energy, the production of ternary cathode materials in July increased by 2.48% compared to the previous month, reaching 89220 tons. However, downstream purchasing intentions were weak and rigid demand was the main factor. Although the demand for ternary materials improved, it was not enough to digest the increase in pure nickel.
Influencing factors: The core influencing factor this week is the expected switch of Indonesia’s RKAB quota policy – from “comprehensive tightening” to “moderate relaxation”. APNI has stated that the quota will remain at 260-270 million tons and only add to smelters with raw material shortages. In terms of inventory, the total LME nickel inventory is running at a high level of 264732 tons, and the warehouse receipts of 101387 tons from the previous period continue to accumulate. On the cost side, mineral prices have fallen slightly compared to the previous period, and cost support has weakened, but the high sulfur level still provides some bottom support.
In summary, the RKAB approval result remains a key variable. If the quota is officially implemented, the downside risk will increase, and if it is tightened again, it will be an upside risk. Macro and geopolitical uncertainties exist, and fundamentals are suppressed by both high inventory and weak demand. It is expected that nickel prices will remain weakly volatile in the short term.
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