Nickel Market Update: Weaker US Dollar and Indonesia Supply Concerns Support Prices
Advisory Bazaar Info Services
The nickel market traded with a firm tone on Thursday as a weaker US dollar and expectations of tighter supply from Indonesia supported prices.
The most-active SHFE Nickel 2609 contract surged in early trading before trimming gains and closed the morning session at 131,900 yuan/mt, up 0.49% from the previous close.
Key Market Drivers
* The US Federal Reserve kept interest rates unchanged at its July FOMC meeting, weighing on the US dollar and providing support to the broader non-ferrous metals complex.
* Market expectations of stricter nickel production quotas in Indonesia, combined with elevated sulfur costs, continue to strengthen the price floor for nickel.
* In the near term, the most-traded SHFE nickel contract is expected to trade within the 128,000–135,000 yuan/mt range.
Global Macro Highlights
The Japanese government and the Bank of Japan intervened in the currency market by buying yen and selling US dollars to support the Japanese currency. Meanwhile, US authorities reportedly conducted exchange rate checks, a move often viewed as a preliminary step before potential market intervention.
On the economic front, data released by the US Department of Commerce showed that the Personal Consumption Expenditures (PCE) Price Index declined 0.1% month-on-month in June, mainly due to lower energy prices. Annual PCE inflation eased to 3.7%, down from 4.1% in May, reinforcing expectations of a softer US dollar and supporting metal prices.
Spot Market Update
On July 31, the SMM #1 Refined Nickel average spot price rose by 600 yuan/mt from the previous trading day to 132,600 yuan/mt.
* Jinchuan #1 Refined Nickel premium remained unchanged at 1,200 yuan/mt.
* Premiums for domestic mainstream electroplated nickel ranged between -300 yuan/mt and 500 yuan/mt.
Market Outlook
Nickel prices are expected to remain supported in the near term by a weaker US dollar, tightening supply expectations from Indonesia, and firm production costs. However, profit-booking at higher levels may limit further upside, with market participants closely monitoring macroeconomic developments and supply-side policy changes.