Price trend

According to the SunSirs’ commodity market analysis system, spot electrolytic nickel was quoted at 122,316 RMB/ton on August 8, a weekly increase of 0.96% and a year-on-year decrease of 4.64%. Nickel prices initially rose last week, then stagnated, primarily influenced by macroeconomic policy expectations and fluctuating market sentiment. The lack of clear fundamental drivers had led to an overall volatile and consolidating pattern.

Analysis review

Macroeconomic Outlook:

Weak US economic data: US non-farm payrolls increased by only 73,000 in July, compared to expectations of 104,000. The May-June data was revised down significantly by 258,000. The rising unemployment rate exacerbated market concerns about an economic slowdown.

Expectations of a Federal Reserve rate cut were strengthening: San Francisco Fed President Mary Daly stated that "two rate cuts this year remain appropriate," with the market anticipating possible 25 basis point cuts in September and December. Expectations of loose liquidity were supporting base metals, but weak demand was limiting gains.

Global trade frictions were escalating: Trump signed an executive order imposing tariffs ranging from 10% to 50% on India, Canada, Brazil, and other countries, further exacerbating market risk aversion.

Domestic policy support continued: China allocated the third 69 billion RMB in special government bond funds for consumer goods trade-ins, with a fourth tranche to follow in October. The 300 billion RMB annual funding plan was steadily progressing. The meeting and anti-involution policies had boosted market confidence, providing clear support.

China's July trade data exceeded expectations, but the global manufacturing PMI, at 49.3% (two consecutive months of contraction), and the Asian manufacturing PMI, at 50.5%, saw a slowdown in expansion, reflecting the continued fragility of the global economic recovery.

Supply Side:

Nickel Ore Prices: The Indonesian domestic nickel ore benchmark price for the first quarter of August was $15,028.33 per dry metric ton, up 0.69% from the second quarter of July. Philippine nickel ore prices remained stable, with increased port arrivals.

Inventory Changes: Domestic Shanghai nickel inventories decreased by 1,084 tons to 20,621 tons during the period, while LME nickel inventories increased by 3,540 tons to 212,232 tons. The global overstock situation remained unchanged, suppressing price upside potential.

Demand Side:

Stainless steel was facing certain production cuts, which was providing weak support for nickel demand. High inventory and weak demand remain. The benchmark price of stainless steel was 13,100 RMB/ton on August 7, up 0.15% from the previous week.

New energy demand: The demand for nickel in the field of ternary precursors and batteries was stable and had not shown significant growth.

Future outlook:

Macroeconomic factors will drive short-term trends: Expectations of a Fed rate cut and the dollar's trajectory remain key variables. If the September rate cut materializes, nickel prices may see a slight upward trend, supported by liquidity. However, escalating trade frictions could exacerbate market volatility and limit gains.

The fundamentals are still weak: the excess pressure on the supply side has not been eliminated, and there is no strong driving force in the stainless steel and new energy sectors on the demand side, so the upward space for nickel prices is limited.

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