According to China Nonferrous Metals News, since August, constrained by global nickel market oversupply pressures, the main Shanghai nickel contract has fluctuated within a core range of 118,000 to 130,000 RMB/ton. Despite expectations of demand recovery in the fourth quarter,

Refined nickel output continues to expand while inventories steadily accumulate, jointly exerting strong downward pressure on prices.

Global Supply Surplus Intensifies

From January to August, global refined nickel production reached 2.5494 million tons, up 301,600 tons year-on-year. During the same period, consumption totaled only 2.2443 million tons, resulting in a supply surplus of 305,100 tons—far exceeding market expectations. This data clearly reflects the severe imbalance between supply and demand in the current nickel market.

Notably, the oversupply trend continues to intensify. According to international agency forecasts, the global nickel market surplus is projected to reach 198,000 metric tons this year, potentially expanding further to 256,000 metric tons by 2026.

Domestic supply remains ample. From January to August, China's nickel ore imports totaled 26.1336 million tons, up 6.47% year-on-year, while ferronickel imports reached 7.267 million tons, a 28.1% increase. Despite short-term disruptions from Indonesia's stricter environmental reviews, Philippine port inventories remain near their five-year median, indicating overall raw material supply remains sufficient.

Driven by profit margins, domestic refined nickel production has shown significant divergence. Currently, among all production processes, only the laterite nickel ore-to-nickel hydroxide route maintains substantial profitability, while other processes generally operate at a loss. Consequently, from January to August, China's cumulative refined nickel output surged by 37.48% year-on-year, with industry operating rates remaining at a high of 94.07%.

Import and export data further corroborate supply pressures. From January to August, China's cumulative refined nickel imports surged by 186.98% year-on-year, while cumulative exports increased by 68.02%. Large volumes of exported domestic nickel plates returning to bonded zones reflect a coexisting scenario of ample domestic supply and weak overseas demand.

Demand Faces Structural Challenges

The stainless steel sector, a primary consumer of nickel, faces the challenge of weak demand during its peak season. Although domestic stainless steel mills saw a 3.26% month-on-month increase in crude steel output in August, with production schedules further improving in September, demand failed to keep pace. Consequently, stainless steel prices continued to weaken, with high-nickel iron prices falling below production costs, pushing most manufacturers into losses.

The new energy sector shows early signs of recovery. In August, nickel sulfate output rose 11% month-on-month, primarily benefiting from increased operating rates for ternary precursor production. Concurrently, the U.S. plan to extend automotive parts tariff credits signals positive momentum for the new energy vehicle market, with nickel demand in battery and electroplating applications expected to bottom out and rebound.

Alloy demand exhibits structural divergence. Global automotive sales maintained double-digit growth, strongly supporting alloy nickel demand. However, persistent weakness in the electronics and computing sectors has significantly dampened demand. The upcoming U.S. court ruling on related tariff policies will become a key variable influencing alloy nickel price trends.

High inventories limit upside potential

Visible inventories continue to accumulate. As of October 27, SHFE nickel warehouse receipts surged 13% month-on-month, while LME nickel stocks jumped 72% year-on-year—both hitting four-year highs.

Currently, the nickel market is marked by significant divergence between bullish and bearish views. On one hand, expectations of Federal Reserve interest rate cuts, cost support, and favorable new energy policies provide support for nickel prices. On the other hand, persistent supply surplus, high inventories, and trade uncertainty limit the upside potential for prices.

Without fundamental improvements in supply-demand fundamentals, nickel prices are expected to remain volatile in the near term. Future focus should center on progress in supply-side structural adjustments and substantive recovery signals from sectors like new energy. Only when supply contracts substantially or demand rebounds beyond expectations will the nickel market potentially reach a true price inflection point.

It is important to note that the nickel market has entered a new normal of oversupply. Against this backdrop, seizing structural opportunities and strictly controlling risk exposure are particularly crucial. For nickel prices to achieve a genuine breakthrough, a fundamental restructuring of supply and demand dynamics remains necessary.

As an integrated internet platform providing benchmark prices, on November 5th, the benchmark price of nickle on SunSirs was 122,216.67 RMB/ton, a decrease of 0.01% compared to the beginning of the month (122,233.33 RMB/ton).

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