Price trend: (10.1-10.17), "n" type oscillation

According to the SunSirs commodity market analysis system, as of October 17, spot electrolytic nickel was quoted at 1,222,583 RMB/ton, up 0.07% year-on-year and down 8.46% year-on-year. The market was primarily driven by the fierce competition between expectations of tightening supply caused by Indonesian policies and the reality of oversupply represented by high global inventories.

Analysis review

Price drivers: the struggle between policy expectations and weak fundamentals

After the holiday, Indonesia's sudden change in mining policy provided a boost to the market. The government significantly shortened nickel ore mining quotas from three years to one year, a move that marked a significant reversal of production control by the government and aimed at stabilizing nickel prices. This policy immediately triggered market concerns about tightening future supply, pushing nickel prices up 1.22% in the early days after the holiday.

However, weakening fundamentals quickly overwhelmed the effects of policy stimulus. Extremely high visible inventories worldwide and weak demand in traditional sectors like stainless steel caused prices to rise and then fall, ultimately fluctuating slightly within a near-flat range throughout the cycle.

Supply side: Long-term concerns are difficult to resolve the near-term oversupply dilemma

1. Policy disturbances become the biggest variable: Although Indonesia's new policy did not immediately reduce the spot supply, it increased the frequency of future quota approvals, which still created uncertainty for the medium- and long-term nickel supply and became a key factor supporting market sentiment.

2. Unprecedented Inventory Pressure: In stark contrast to policy concerns lay the dire reality of inventory levels. Global visible inventories continued to accumulate, reaching record highs. LME nickel inventories surged by 19,218 tons to 250,530 tons, while Shanghai Futures Exchange inventories surged by 2,225 tons to 27,042 tons. These massive inventories were direct evidence of oversupply, suppressing the upward potential of nickel prices.

3. Clear supply growth trend: Macquarie predicts that the global nickel market will remain oversupplied until 2030, driven by surging supply from Indonesia. Indonesia accounts for 70% of global production. Its massive production capacity and continued growth projections mean output is expected to reach 2.4-2.5 million tons in 2025, fundamentally limiting the long-term ceiling for nickel prices.

Demand side: weakness in traditional sectors and promising prospects for new energy

1. Weak demand for stainless steel: As a major nickel consumer, the stainless steel market is experiencing high production and weak destocking. Post-holiday inventories accumulated, and prices fluctuated weakly, indicating that end-user demand had not kept pace with supply, failing to effectively drive nickel prices. On October 17, the benchmark stainless steel price on SunSirs was 13,037.50 RMB/ton, down 0.13% from the beginning of the month.

2. New energy sectors provided long-term growth: Positive factors stemed from cutting-edge technology. China had achieved significant breakthroughs in all-solid-state lithium metal battery technology, potentially doubling the range of electric vehicles. Solid-state batteries generally utilize high-nickel/ultra-high-nickel ternary materials. The clarity of this technological path paints a broad growth picture for future nickel demand. Although large-scale commercial installation is not expected until 2026-2027, this positive long-term outlook provides significant downward support for nickel prices.

Market outlook:Bulls and bears intertwine, wide fluctuations remain the main theme

It is expected that nickel prices will continue to fluctuate widely in the short term with a top and a bottom.

The upward drive depends on the subsequent implementation of Indonesian policies, the demand for inventory replenishment in the new energy industry chain, and the fermentation of expectations of a Fed rate cut at the macro level.

Downward pressure comes from the continued suppression of high global inventories, the realization of actual supply growth in Indonesia, and weak consumption in the traditional stainless steel sector.

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