On July 17, the domestic futures market for non-ferrous metals experienced a downturn, with notable weakness in Shanghai Nickel Futures. The main contract for nickel futures is currently valued at 131,720 yuan, reflecting a decline of 1.37%.
Fundamentally, Shenyin Wanguo Futures reported that progress on Indonesia’s RKAB approvals remains sluggish, contributing to ongoing tightness in the nickel ore supply. While some domestic nickel iron plants have resumed operations and new production capacities in Indonesia have been brought online, demand for nickel iron remains subdued, leading to a lackluster performance in nickel prices.
On the demand side, Ruida Futures highlighted that the off-season for ternary precursors has resulted in weak corporate orders. Additionally, activity in nickel salt inquiries and transactions is low. The stainless steel sector is also approaching its off-season, evidenced by a significant drop in the new order index.
Inventory data provides a mixed picture. Chaos Tiancheng Futures reported a decrease of 525 tons, or 1.87%, in social inventories across six locations last week. Bonded area inventories remained unchanged, while futures inventories dropped by 646 tons, a decrease of 2.87%. Overall, domestic visible inventories fell by 1,143 tons, or 2.03%. Conversely, LME inventories rose by 618 tons, or 0.64%, with a global visible inventory decline of 525 tons, or 0.34%, for the week.
Looking forward, Tongguan Jinyuan Futures noted that Federal Reserve Chair Jerome Powell’s recent dovish signals suggest a potential rate cut cycle due to reduced inflationary pressure and a cooling labor market. Despite bearish fundamentals, the domestic trade price of Indonesian laterite nickel ore has increased, and the persistent ore shortage remains unresolved in the short term. Consequently, the price of nickel iron has also risen, potentially providing some support below current levels, although nickel prices are expected to continue fluctuating.
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