Group 1 - The core viewpoint of the article is that Indonesia's nickel mining policy significantly impacts global nickel prices, with recent announcements leading to a notable increase in nickel prices on the Shanghai Futures Exchange (SHFE) [1][3][23] - Indonesia's Ministry of Energy and Mineral Resources announced a nickel mining production target of 260 to 270 million tons for 2026, with major mines like Weda Bay Nickel receiving a reduced approval rate of only 30% [1][3][10] - The tightening of supply due to policy changes has led to a significant price increase, with the SHFE nickel futures contract reaching a high of 140,230 and closing at 139,360, marking a daily increase of 4.51% [1][3][23] Group 2 - The article discusses the synergistic support for nickel prices from both endogenous and exogenous factors, suggesting that the current market conditions do not warrant a bearish outlook on nickel prices [2][11] - Exogenous factors include the strengthening of nickel's financial attributes and its strategic metal positioning, while endogenous factors highlight structural shortages in the spot market and rising industry costs that limit price declines [2][11] - The overall expectation is that the main price range for SHFE nickel will stabilize between 135,000 and 140,000, with potential catalysts from future policy adjustments [2][23] Group 3 - Historical analysis indicates that Indonesia's nickel mining policies have been inconsistent, often leading to significant fluctuations in market expectations and prices [5][6] - The article emphasizes the importance of monitoring upcoming policy revisions and quota distributions, particularly in February and March, as well as the mid-year review of the RKAB [24] - The supply-demand balance for nickel is projected to face challenges, with potential shortfalls if the government implements strict policies too quickly [8][10]

Core Viewpoint - Nickel prices have seen a significant increase of over 30% from mid-December to early January, driven by news of Indonesia's potential reduction of nickel ore quotas for 2026, although prices are currently under pressure due to overall high levels in the non-ferrous metals market [3][15]. Nickel Ore Policy Developments - Indonesia's Ministry of Energy and Mineral Resources (ESDM) plans to strategically adjust the nickel ore production quota (RKAB) to between 250 million and 260 million tons, with existing quotas allowed to continue until the end of Q1 to ensure production continuity during the review period [4][16]. - The price of nickel ore has increased, with a recent transaction of 1.3% grade nickel ore from the Philippines at FOB $38, reflecting a significant week-on-week increase [4][16]. - Domestic nickel ore imports for the first 11 months of 2025 reached 40.169 million tons, a year-on-year increase of 10.3%, with nearly 91% sourced from the Philippines [4][16]. Nickel Iron Price Trends - In December 2025, nickel pig iron production in China and Indonesia was 180,300 tons, a slight increase of 0.6% month-on-month and a 4.8% year-on-year growth [6][18]. - Domestic high-nickel pig iron prices have risen, with factory prices reaching 1,010-1,020 RMB per nickel, while Indonesian nickel pig iron FOB prices increased to $128 per nickel [6][18]. - Nickel pig iron imports for the first 11 months of 2025 totaled 10.056 million tons, a 26.7% increase year-on-year, with approximately 97% of imports from Indonesia [6][18]. Refined Nickel Inventory Pressure - Domestic refined nickel production in December 2025 was 29,058 tons, a slight increase from November but a 16.4% year-on-year decline, with total production for the year at 410,800 tons, a 22.8% increase [8][20]. - As of January 16, total nickel inventory on the Shanghai Futures Exchange reached 48,180 tons, with registered warehouse receipts at 41,985 tons, indicating ongoing inventory pressure [8][20]. - LME nickel inventory has also been on the rise, with the latest total at 285,700 tons, suggesting a globally loose supply of refined nickel [8][20]. Demand Stability and Weakness - Nickel demand is primarily driven by stainless steel, ternary batteries, and nickel alloys, with stainless steel being the most significant sector [10][22]. - In December 2025, domestic production of 300 series stainless steel was 1.7472 million tons, a slight decrease from November but a 5.6% year-on-year increase [10][22]. - The price of battery-grade nickel sulfate has rapidly increased to 33,600 RMB per ton, indicating some purchasing demand from nickel salt manufacturers despite overall weak speculative demand [10][22]. Summary - The overall environment shows increased volatility in silver and copper prices, which may influence nickel prices [12][24]. - Indonesia's announcement regarding potential reductions in nickel ore quotas is still developing, which could impact market sentiment [12][24]. - Despite the recovery in sentiment across the nickel supply chain, there remains significant pressure from excess inventory, particularly in refined nickel [12][24].

1. Report Industry Investment Rating - The overall investment rating for nickel is "neutral", while the core view is "bullish". Specific aspects have different ratings: nickel ore price is "neutral", Indonesian domestic trade nickel ore is "bullish", freight is "neutral", refined nickel production is "bearish", refined nickel inventory (SMM) is "bearish", domestic NPI price is "bullish", nickel iron production is "bullish", nickel sulfate production is "bullish", stainless steel production schedule is "bullish", stainless steel social inventory is "bullish", and stainless steel cost is "bullish" [3] 2. Core View of the Report - The current market focus has shifted to the RKAB quota approval in 2026, and the Indonesian Mining Association expects the relevant process to be completed within the next three months. Given the flexibility in policy implementation, there is a need to be vigilant about the deviation between the actual implementation of the quota and market expectations. Currently, nickel prices are supported by supply - side policy constraints and are expected to temporarily break away from the current pressure. However, as speculative funds drive the price to an overly optimistic range, nickel prices may be verified by the fundamentals [3][4] 3. Summary by Relevant Catalogs 3.1 Industry News Update - Jilin Jien Nickel Industry Co., Ltd.'s 60,000 - ton nickel sulfate project was officially put into operation on December 31, 2025 [7] - Due to the non - approval of the 2026 nickel ore RKAB quota, PT Vale Indonesia Tbk has suspended its nickel ore mining activities [7] - On December 26, 2025, Shengtun Mining Group Co., Ltd. announced the termination of its investment in the 40,000 - ton high - grade nickel matte project in Indonesia [7] - The Indonesian Forest Law Enforcement Task Force (PKH) will fine 71 palm oil plantations and mining companies that violated forest area use as of December 8, 2025, including PT Weda Bay Nickel [7] - The Indonesian Nickel Miners Association (APNI) revealed that the Ministry of Energy and Mineral Resources will revise the benchmark price formula for nickel ore commodities in early 2026, and the revised version will be announced in January or February [7] - The Indonesian government plans to cut the nickel ore mining quota in 2026, with the target set at about 250 million tons [7] 3.2 Market Performance - Last week, the main contract of SHFE nickel 2602 opened at 126,700 yuan/ton, closed at 132,850 yuan/ton, with a weekly high of 135,570 yuan/ton and a low of 124,180 yuan/ton, up 4.81% for the week [9] - The main contract of stainless steel opened at 12,955 yuan/ton, closed at 13,125 yuan/ton, with a weekly high of 13,200 yuan/ton and a low of 12,840 yuan/ton, up 1.31% for the week [78] 3.3 Price Changes - As of January 5, the average price of 8 - 12% high - nickel pig iron increased by 30 yuan/nickel point to 930 yuan/nickel point, a week - on - week increase of 3.33% [3][30] - As of January 5, the price of electrolytic nickel spot increased by 8,450 yuan/ton to 138,150 yuan/ton, a week - on - week increase of 6.52% [16] - As of January 5, the price of Jinchuan nickel increased by 8,450 yuan/ton to 141,750 yuan/ton, a week - on - week increase of 6.34%, and the premium increased by 300 to 7,400 yuan/ton [17] - As of January 5, the price of imported nickel increased by 8,150 yuan/ton to 134,750 yuan/ton, a week - on - week increase of 6.44%, and the premium remained flat at 400 yuan/ton [17] - As of January 5, the LME nickel price increased by 1,530 US dollars/ton to 17,290 US dollars/ton, a week - on - week increase of 9.71% [21] - As of January 6, the CIF prices of 0.9%, 1.5%, and 1.8% Philippine laterite nickel ore remained flat at 29, 57, and 78.5 US dollars/wet ton respectively compared with last week [36] - As of January 2, the ex - works prices of Ni1.2% and Ni1.6% domestic trade nickel ore in Indonesia remained flat at 22.5 and 51.9 US dollars/wet ton respectively compared with last week [36] - As of January 6, the production cost of Chinese 304 cold - rolled stainless steel increased by 233 yuan/ton to 13,086 yuan/ton, a week - on - week increase of 1.81% [88] 3.4 Supply and Demand - According to the monthly balance sheet of primary nickel in China, from May 2025 to May 2026, the total supply and demand of nickel are in a state of balance, with a supply surplus [4] - As of December 2025, China's electrolytic nickel monthly output increased by 0.56 million tons to 3.14 million tons, a month - on - month increase of 21.7% and a year - on - year decrease of 0.37% [3][48] - As of December 2025, China's nickel sulfate monthly output decreased by 1,640 tons to 29,200 nickel tons, a month - on - month decrease of 4.47% [3][62] - As of December 2025, China's stainless steel crude steel output decreased by 226,000 tons to 3.2671 million tons, a month - on - month decrease of 6.47% and a year - on - year decrease of 5.09% [3][81] - As of January 2, stainless steel social inventory decreased by 27,800 tons to 977,400 tons, a week - on - week decrease of 2.76% [3][84] 3.5 Inventory - As of January 6, SHFE nickel warehouse receipts increased by 878 tons to 39,400 tons, a week - on - week increase of 2.28%, and LME nickel warehouse receipts increased by 360 tons to 255,500 tons, a week - on - week increase of 0.14% [52] - Last week, the pure nickel social inventory (including SHFE) increased by 556 tons to 58,900 tons, a week - on - week increase of 0.95% [3][52] - As of December 31, nickel ore port inventory decreased by 120,000 tons to 8.69 million wet tons, a week - on - week decrease of 1.36% [39] 3.6 Production Cost - As of December 2025, the average production cost of SMM electrolytic nickel increased by 143 US dollars/ton to 13,351 US dollars/ton, a month - on - month increase of 1.08% [58] - As of December 2025, the production costs of integrated MHP and high - grade nickel matte for producing electrowon nickel were 111,026 yuan/ton and 124,817 yuan/ton respectively [58] - As of January 6, the production cash cost of RKEF in Fujian decreased by 0.57 yuan/nickel point to 940.34 yuan/nickel point, and the production profit margin increased by 3.31 percentage points to - 0.49% [74]

Core Viewpoint - The nickel market is experiencing a strong rebound due to Indonesia's plans to significantly reduce nickel ore supply quotas for 2026 and potential adjustments to pricing rules, leading to a surge in nickel prices to an 8-month high [1][3]. Group 1: Market Reaction - On December 23, LME nickel prices peaked at $15,980 per ton, while on December 24, Shanghai nickel reached 130,880 yuan per ton, marking the highest levels in eight months [1]. - The Shanghai nickel main contract has seen a continuous rise for six trading days, with a maximum cumulative increase of over 17% since hitting a five-year low on December 17 [3]. Group 2: Policy Implications - The Indonesian Nickel Mining Association (APNI) announced a target of approximately 250 million tons for nickel ore production in the 2026 work plan, a significant reduction from the 379 million tons set for 2025, aimed at preventing further price declines [3]. - The potential revision of the nickel reference price calculation formula may classify by-products like cobalt as independent commodities, which could lead to increased costs in the nickel industry [3][6]. Group 3: Supply and Demand Dynamics - Despite the price surge, analysts caution that the nickel market still faces oversupply pressures, with high inventories and weak demand persisting [2][7]. - Current nickel inventories at the London Metal Exchange stand at 253,000 tons, while domestic refined nickel stocks have reached 59,000 tons, indicating a continued oversupply situation [7]. - The demand side is entering a traditional off-peak season, with expectations of reduced production in stainless steel and other sectors, further complicating the supply-demand balance [7][8]. Group 4: Future Outlook - The implementation of Indonesia's supply quota reduction is seen as a critical factor for future nickel price trends, with a potential marginal improvement in the supply-demand balance if the quota is enforced [8]. - Analysts suggest that while market sentiment is currently positive, the underlying oversupply may limit the sustainability of the price rebound, indicating a need to monitor the situation closely [8].

Group 1: Report's Core Viewpoints - Nickel faces concerns about Indonesian policies, leading to a sentiment-driven price increase on the trading floor [4] - Stainless steel has a weak supply - demand fundamental situation, and is affected by news of Indonesian nickel mines [4] Group 2: Industry News - On September 12, the Indonesian Forestry Task Force took over over 148 hectares of PT Weda Bay Nickel's mining area due to violations, which is expected to affect nickel production by about 600 metal tons per month [2] - China has suspended an unofficial subsidy for imported copper and nickel from Russia [3] - On September 22, the Indonesian Ministry of Energy and Mineral Resources imposed sanctions on 190 mining companies for not providing claim and refund guarantees [3] - On September 30, the Indonesian Ministry of Energy and Mineral Resources issued Ministerial Decree No. 17 (2025) regarding RKAB approval procedures, with the 2026 RKAB approval deadline set for November 15, 2025 [5] - Trump announced on October 10 that he might impose an additional 100% tariff on China from November 1 and implement export controls on "all critical software" [5] - The Indonesian government has suspended issuing new smelting licenses for certain nickel - related products through the OSS platform [6] - Indonesian industrial parks are strengthening safety inspections, affecting the production of some nickel wet - process projects, with a production reduction of about 6000 nickel metal tons in December [6] - On November 21, New York Fed President John Williams and Fed Governor Stephen Miran made dovish remarks, increasing the probability of a 25 - basis - point interest rate cut in December [6] - On December 12, China's Ministry of Commerce and General Administration of Customs decided to impose export license management on some steel products starting January 1, 2026 [6] - The Indonesian Nickel Miners Association (APNI) revealed that the government will revise the nickel ore benchmark price formula in early 2026 and start taxing cobalt as an independent commodity [6] - The Indonesian government plans to significantly reduce the 2026 nickel ore production target from 379 million tons to 250 million tons [7] Group 3: Fundamental Data Tracking Futures Data - The closing price of the main Shanghai nickel contract is 123,440, and the closing price of the main stainless - steel contract is 12,905 [3] - The trading volume of the main Shanghai nickel contract is 386,986, and the trading volume of the main stainless - steel contract is 263,756 [3] Industry Chain - Related Data - The price of 1 imported nickel is 122,250, the Russian nickel premium is 600, and the nickel bean premium is 2300 [3] - The price of 8 - 12% high - nickel pig iron (ex - factory price) is 889, and the nickel plate - high - nickel iron price difference is 334 [3] - The nickel plate import profit is 572 [3] - The price of laterite nickel ore 1.5% (Philippines CIF) is 55 [3] - In the stainless - steel market, prices of different products such as 304/2B rolls and 304/No.1 rolls vary, with price changes from different time periods [3] - The price of high - carbon ferrochrome (FeCr55, Inner Mongolia) is 8100, and the price of battery - grade nickel sulfate is 27,430 [3] - The nickel sulfate premium is 535 [3] Group 4: Trend Intensity - The trend intensity of nickel is +1, and the trend intensity of stainless steel is +1 [7]

Group 1 - The domestic futures market for non-ferrous metals showed mixed performance, with nickel futures experiencing a strong upward trend, reaching a peak of 123,490.00 CNY/ton, marking a 3.64% increase [1] - The outlook for nickel prices is positive, driven by expectations of cost increases and a recovery from previous lows, although there are concerns about potential quota reductions impacting the market [2] - Nickel ore prices are stabilizing due to regulatory actions against illegal mining in Indonesia and seasonal weather impacts in the Philippines, which may affect production [3] Group 2 - The reduction in nickel ore approvals in Indonesia is expected to limit the release of primary nickel production by 2026, while taxation on semi-finished cobalt will increase production costs [2] - Despite the positive sentiment in the market, there are concerns regarding the overall demand, particularly in the stainless steel sector, which is facing pressure from downstream nickel-iron producers [3] - The current market is characterized by an oversupply of primary nickel, with inventory levels remaining relatively high, indicating a cautious outlook for future consumption [3]

1. Report's Industry Investment Rating - Not provided in the given content 2. Core Viewpoints of the Report - Short - term nickel price support is enhanced, but the upward space depends on the implementation of Indonesian policies. The previous trading logic of the nickel futures was the pressure of oversupply and the expected commissioning of hydrometallurgical projects. The Indonesian news has weakened the confidence of short - sellers, and short - covering has led to a recovery in nickel prices. The fundamentals of refined nickel have shifted from strong supply and weak demand to weak supply and demand, with a slowdown in the inventory accumulation rate. However, the expected increase in the supply of low - cost hydrometallurgical paths in the long - term still exists, which restricts the upward elasticity of nickel prices [3]. - The fundamental contradiction of stainless steel is not prominent, and attention should be paid to the disturbance of Indonesian policy news. Indonesian quota and resource tax policies increase the uncertainty of ferronickel costs. If the quota policy is implemented, it is expected to turn the contradiction of nickel element oversupply into a shortage. The implementation of the resource tax still depends on the pricing model of associated resources in Indonesia, and it will moderately increase the cost. The fundamentals of stainless steel show a slight oversupply, with a good bottom safety margin, but the upward driving force depends on the implementation of Indonesian policies [3][4]. 3. Summary by Relevant Catalogs 3.1 News Analysis - The Indonesian government has urged enterprises to resubmit the 2026 RKAB budget, and the market rumor is that Indonesia hopes to cut the nickel ore quota to 2.5 billion tons. According to calculations, the nickel ore demand in Indonesia from 2024 - 2026 is expected to be 250 million, 280 million, and 300 million tons respectively. A 2.5 - billion - ton quota may lead to a shortage of nickel ore, force smelters to cut production, and turn the expected surplus of primary nickel into a shortage, which will also have a great impact on the existing high inventory. However, the actual implementation remains to be seen [1]. - The Indonesian government may include associated minerals such as cobalt in nickel ore into the tax system. The adjustment of the resource tax on high - grade nickel ore in the first half of the year theoretically increased the smelting cost by about 700 yuan/metal ton. The impact of including cobalt in the tax system on cost depends on the base - price formula for cobalt determined by Indonesia. The cost increase should not be over - estimated. However, it may have a negative impact on pyrometallurgical enterprises and bring uncertainty to the pricing model of low - grade hydrometallurgical ore [2]. 3.2 Market Quotes - Nickel: The short - term support for nickel prices has increased, but the upward space depends on the implementation of Indonesian policies. The fundamentals of refined nickel have shifted from strong supply and weak demand to weak supply and demand, with a slowdown in the inventory accumulation rate. The expected increase in the supply of low - cost hydrometallurgical paths in the long - term restricts the upward elasticity of nickel prices [3]. - Stainless steel: The fundamental contradiction is not prominent. Indonesian policies increase the uncertainty of ferronickel costs. The current supply and demand pattern shows a slight oversupply, with a good bottom safety margin, and the upward driving force depends on the implementation of Indonesian policies [3][4]. 3.3 Inventory Tracking - Refined nickel: China's social inventory increased by 281 tons to 56,988 tons. Among them, warehouse - receipt inventory increased by 2,352 tons to 37,602 tons, spot inventory decreased by 2,071 tons to 15,416 tons, and bonded - area inventory remained unchanged at 3,970 tons. LME nickel inventory increased by 1,518 tons to 254,550 tons [5]. - New energy: On December 19, the inventory days of upstream, downstream, and integrated production lines of SMM nickel sulfate changed by +1, - 1, and 0 month - on - month to 5, 8, and 7 days respectively; the precursor inventory on December 19 changed by +0.8 month - on - month to 13.1 days; the ternary material inventory on December 18 remained unchanged at 6.9 days [5]. - Ferronickel - stainless steel: On November 30, the SMM ferronickel inventory was 29,346 tons, a month - on - month decrease of 3%. The SMM stainless steel factory inventory in November was 1.588 million tons, a year - on - month/ month - on - month increase of 6%/1%. On December 18, the total social inventory of stainless steel was 1,042,148 tons, a week - on - week decrease of 2.01%. Among them, the cold - rolled stainless steel inventory was 610,282 tons, a week - on - week decrease of 1.5%, and the hot - rolled stainless steel inventory was 431,866 tons, a week - on - week decrease of 2.73% [5]. 3.4 Market News - On September 12, due to violations of forestry license regulations, the Indonesian Forestry Working Group took over a nickel mining area of over 148 hectares of PT Weda Bay Nickel. The area accounts for 0.3% of the total mining area, and the expected impact on nickel ore production is about 600 metal tons per month [6]. - China has suspended an unofficial subsidy for copper and nickel imports from Russia [7]. - On September 22, the Indonesian Ministry of Energy and Mineral Resources imposed sanctions on 190 mining companies. The sanctions will be lifted once the companies submit a claim plan and provide a claim guarantee until 2025 [7]. - On September 30, the Indonesian Ministry of Energy and Mineral Resources issued Ministerial Decree No. 17 (2025) regarding the procedures for the preparation, submission, and approval of the work plan and budget for mineral and coal mining business activities and the procedures for activity implementation reports [7]. - On October 10, US President Trump announced on social media that he might impose an additional 100% tariff on China from November 1 and implement export controls on "all key software" [8]. - The Indonesian government has suspended the issuance of new smelting licenses through the OSS platform, targeting projects producing nickel matte, MHP, FeNi, and NPI [8]. - According to SMM news, the safety production inspection in Indonesian industrial parks has affected the short - term production of some nickel hydrometallurgical projects, with an expected impact on production of about 6,000 nickel metal tons in December [10]. - On November 21, the dovish remarks of New York Fed President John Williams and Fed Governor Stephen Miran prompted investors to raise the probability of a 25 - basis - point interest rate cut in December [10]. - On December 12, the Ministry of Commerce and the General Administration of Customs decided to implement an export license management system for some steel products starting from January 1, 2026 [10]. - The Indonesian Nickel Miners Association (APNI) revealed that the Ministry of Energy and Mineral Resources (ESDM) will revise the benchmark price formula for nickel ore commodities in early 2026, and will start treating cobalt as an independent commodity and levy royalties [10]. - Market rumors suggest that the Indonesian government plans to significantly reduce the 2026 nickel ore production target from 379 million tons to 250 million tons [10].

1. Report Industry Investment Rating No relevant information provided. 2. Core Views of the Report - In 2026, the fundamental contradictions in the Shanghai nickel market are accumulating, and the volatility is expected to increase. The static reference range is 95,000 - 130,000 yuan/ton. The overall supply - demand surplus pressure persists. The supply side may experience a path switch. The second - phase expansion of low - cost hydrometallurgical production may impact pyrometallurgical processes, and the traditional nickel - to - ferronickel conversion path may face clearance risks. The pricing of various nickel products is expected to gradually converge, with the lower limit anchored to the full cost of hydrometallurgical production. The upward drive depends on Indonesian policy disturbances [2][107]. - Stainless steel has shifted from a situation of strong supply and weak demand to a situation of weak supply and demand. It may tend to fluctuate at the bottom, with limited downward potential. The increase in hydrometallurgical nickel supply may indirectly increase the pressure on pyrometallurgical production but does not directly replace it in the stainless - steel production line. The cost of the pyrometallurgical path is still the bottom - line anchor for stainless steel, with a reasonable safety margin. The upper limit of the price depends on Indonesian and domestic macro - policies, with a static reference range of 12,000 - 13,200 yuan/ton [2][107]. - In terms of strategies, when facing a weak smelting - end fundamental situation and high uncertainty at the mining end, two approaches can be considered: for short - selling, avoid chasing short positions at low prices, consider short - selling at high prices with option protection to avoid extreme Indonesian risk events; for long - buying, dynamically track the cost of hydrometallurgical nickel, including the prices of by - product cobalt and auxiliary sulfur, to find a good safety margin. For stainless steel, the cost still provides support, and the safety margin is better than that of nickel. In 2026, the overall strategy is to try long positions when the price hits the bottom, but avoid over - chasing high prices without clear policy implementation. Also, pay attention to the opportunity of going long on stainless steel and short on nickel when the nickel - to - steel ratio is high, and consider the possibility of periodic domestic - foreign positive/negative arbitrage [3][108]. 3. Summary by Relevant Catalogs 3.1 2025 Review of Nickel and Stainless - Steel Trends: Volatility Narrowed, and the Market Trended Weakly in Fluctuations - In 2025, the overall volatility of nickel and stainless - steel narrowed, and the oscillation center gradually moved downward. From January to March, they trended strongly, with the highest increases approaching 9% and 6% respectively, driven by mining - end rainy seasons, Indonesian quota approvals, and inventory replenishment by major traders. From April to June, they first declined and then rebounded, shifting from fundamental to macro - logical drivers. From July to November, they trended weakly in fluctuations, with the center gradually moving down due to factors such as inventory build - up expectations and weakening demand [5]. 3.2 The Production Cycle Shifts to Hydrometallurgy, Be Wary of Indonesian Mining - End Risks 3.2.1 The Supply of Refined Nickel and Nickel Sulfate Depends on Front - End Smelting - In 2025, the back - end smelting production cycle entered the second half, and the industrial model change led to structural contradictions in supply and demand. The global refined nickel output from January to October increased by 50,000 tons year - on - year to 900,000 tons, with a cumulative year - on - year growth rate of 6%, mainly contributed by China. The global nickel sulfate output from January to October decreased by 10,000 tons year - on - year to 420,000 tons, with a cumulative year - on - year growth rate of - 2%. However, in mid - 2025, China's supply elasticity was released due to a temporary recovery in new - energy demand [9]. - There were structural contradictions in supply and demand. Intermediate products and nickel sulfate were in short supply, while refined nickel inventories increased significantly. The high inventory and selling pressure of refined nickel squeezed the valuation of Shanghai nickel. The tightness of intermediate products was due to the transformation of the industrial model, with resources integrating towards "integrated" or "equity resource + toll - processing" enterprises [10]. - The supply contradiction is concentrated in the front - end, and the increase depends on hydrometallurgical supply. The planned intermediate product projects from 2026 - 2027 may have a total capacity of over 600,000 tons, with hydrometallurgical projects accounting for 87% of the capacity. It is expected that the production of Indonesian MHP in 2025 and 2026 will increase by 130,000 and 160,000 tons year - on - year to 460,000 and 620,000 tons respectively, and the production of Indonesian oxygen - enriched side - blown ferronickel will increase by 20,000 and 30,000 tons year - on - year to 40,000 and 70,000 tons respectively [17][19]. - The competitiveness of RKEF conversion to ferronickel may continue to weaken. In 2025, the volume of converted ferronickel decreased by 100,000 tons year - on - year to 270,000 tons. In 2026, due to the increasing year - on - year growth of MHP and oxygen - enriched side - blown ferronickel, the supply of converted ferronickel may face more severe challenges [25]. 3.2.2 The Incremental Supply of Ferronickel is Limited, but the Stock Elasticity is Still High - In 2025, the supply of Indonesian ferronickel continued to squeeze the Chinese and overseas markets. The global ferronickel output from January to October increased by 150,000 tons year - on - year to 1.84 million tons, with a cumulative year - on - year growth rate of 9%, mainly contributed by Indonesia. The output of Chinese and other overseas regions decreased by 50,000 tons year - on - year to 380,000 tons, with a cumulative year - on - year growth rate of - 10%. The ferronickel market had a certain inventory build - up, but due to cost support, the price decline was limited [28]. - The expected new production in Indonesia is slowing down, and the incremental supply of ferronickel is limited. In 2026, the growth of Indonesian ferronickel production capacity is expected to slow down from 10% to about 5%. It is expected that the global ferronickel supply in 2026 will increase by 60,000 tons year - on - year to 2.26 million tons, with a year - on - year growth rate of about 3%. The strategy for the ferronickel - stainless - steel line is to try long positions when the price hits the bottom, but avoid over - chasing high prices without clear supply disturbances or policy guidance [31]. 3.2.3 The Contradiction in Indonesian Nickel Mines has High Uncertainty - The contradiction at the mining end and the inventory build - up at the smelting end are in a game, and Indonesian policies still have high uncertainty. The pricing of Indonesian pyrometallurgical nickel mines has adopted a "base price + premium" model since 2023. The decline in LME nickel prices has led to a decrease in the base price, but the premium has increased, offsetting the risk of squeezed profits. The total price of Indonesian pyrometallurgical nickel mines increased slightly, which may lead to a 5% increase in the full - cost center of ferronickel produced by Indonesian self - supplied power plants to about $11,000/metal ton [40]. - From the perspective of policy expectations, Indonesia may take appropriate measures to prevent resource over - supply, such as changing the quota approval from three - year to one - year in 2026. However, Indonesia may not want a sharp increase in nickel prices and may prefer to control quotas to prevent over - supply and moderately boost prices [41]. - The cost of Indonesian hydrometallurgical production is rising steadily, and the high cobalt price supports the economic viability of nickel. The price of hydrometallurgical ore is rising moderately, and the increase in the price of auxiliary sulfur has pushed up the MHP cost. However, the increase in the by - product cobalt price can offset part of the cost, so the negative impact on MHP production economics is limited [51]. 3.3 Demand Contradictions may not be Prominent, and Long - Term Potential Lies in Ternary Materials 3.3.1 The Short - Term Growth of Ternary Material Demand is Moderate, and More Long - Term Potential is Expected - The positive and negative impacts of the increase in electric vehicle penetration rate and the decline in the structural proportion of ternary batteries offset each other, resulting in a weak growth pattern for ternary materials. In 2025, the global electric vehicle demand increased by over 20%, while the global ternary battery output increased by only over 10% year - on - year, and the inventory pressure in the industrial chain decreased [53]. - In 2026, the "positive total" and "negative structure" drivers of new - energy demand for nickel will both weaken, but still offset each other to some extent. The global electric vehicle demand growth rate may decline, and the ternary market share may still face pressure. However, the negative impact of inventory reduction on upstream demand is weakening, and the elasticity of demand during seasonal peak replenishment is increasing [53]. - Future potential depends on emerging demands such as solid - state batteries, robots, and low - altitude economy. 2027 may be an important turning point for demand. If the investment in solid - state batteries meets expectations, the ternary material demand may still grow weakly in 2026 but may turn around in 2027 [54]. 3.3.2 The Incremental Demand for Alloys is Limited, and the Raw - Material Structure is Changing - The growth rate of alloy demand is expected to be limited, and attention should be paid to the marginal changes in high - temperature and corrosion - resistant alloys. The overall growth rate of alloy demand has been declining year by year. The demand for corrosion - resistant alloys is under pressure due to factors such as the slowdown in the expansion of LNG receiving stations and the decline in LNG shipping orders. The demand for high - temperature alloys is more resilient, but the orders may be concentrated in leading enterprises [69]. - The price difference between ferronickel and refined nickel may converge in the long run. Some alloy special - steel enterprises may adjust their raw - material structure by using more ferronickel to replace refined nickel, which may intensify the supply - demand mismatch of refined nickel and also provides a new perspective on whether the conversion of ferronickel to ferronickel will be phased out in the long run [70][71]. 3.3.3 The Demand Elasticity of Stainless Steel is Low, and the Supply Rhythm Affects Nickel Consumption - The demand for stainless steel is growing weakly. The demand elasticity is low, and it is difficult to have unexpected performance. From 2020 - 2025, the year - on - year growth rate of apparent demand decreased marginally, mainly affected by factors such as the slowdown in terminal manufacturing investment, the drag of the real - estate post - cycle sector, and overseas trade barriers [89]. - The stainless - steel market has shifted from strong supply and weak demand to weak supply and demand, and the bottom - grinding market may be repeated. In 2025, the stainless - steel market was in a "bottom - seeking" process, and the supply growth rate decreased from over 8% to 3.2%. In 2026, if the stainless - steel market remains undervalued, the excess pressure is unlikely to increase. The strategy for stainless steel in 2026 is to try long positions at low prices, and the upward potential depends on external policy drivers [94][95]. 3.4 Supply - Demand Balance and Outlook 3.4.1 Supply - Demand Balance Sheet - From a static balance perspective, in 2026, the surplus contradiction in the nickel smelting end still exists. The supply side may increase by 80,000 tons year - on - year to 3.86 million tons, and the demand side may increase by 80,000 tons year - on - year to 3.63 million tons, with a surplus of 240,000 tons. The increase in low - cost supply may lower the clearing line for nickel prices, but the upward potential also depends on Indonesian mining - end policies [101]. - Dynamically, there are uncertainties about whether the inventory build - up in 2026 will be as expected, including the impact of Indonesian mining - end policies, the speed of the clearing process, the impact of macro - policies, and the possibility of hidden inventory replenishment [103]. 3.4.2 Conclusion - The fundamental contradictions in the Shanghai nickel market are accumulating, with increased volatility expected in 2026. The static reference range is 95,000 - 130,000 yuan/ton. Stainless steel has shifted to a weak supply - demand pattern, with a static reference range of 12,000 - 13,200 yuan/ton [107]. - The strategies include avoiding short - selling at low prices, considering short - selling at high prices with option protection, dynamically tracking the cost of hydrometallurgical nickel for long - buying, and paying attention to the opportunity of long - stainless steel and short - nickel when the nickel - to - steel ratio is high, as well as periodic domestic - foreign positive/negative arbitrage [108]. - In 2026, the front - end smelting may enter a second peak of low - cost replacement of high - cost production. The pyrometallurgical path still has pressure but also provides a certain safety margin. The static balance is still challenged by Indonesian policies, and the long - term outlook is promising, with 2027 possibly being an important turning point [109][110].

Core Viewpoint - Nickel prices experienced significant fluctuations in the first half of the year, driven by supply constraints and macroeconomic factors, but ultimately fell due to oversupply conditions [1][2][9] Nickel Price Trends - In Q1, nickel prices rose to a high of 136,000 yuan/ton due to tight supply and favorable macro conditions, but in Q2, prices declined as oversupply became a concern [1] - Specific events influencing prices included Indonesia's RKAB quota reduction in January, trade tensions affecting demand in April, and subsequent policy changes in Indonesia and the Philippines [1][2] Policy Impact - Indonesian and Philippine nickel mining policies significantly affect nickel prices, with both countries accounting for nearly 70% of global nickel production by 2024 [2][3] - Policies can be categorized into "quantity" (e.g., RKAB quotas, export bans) and "price" (e.g., HMA price adjustments, increased resource usage fees), with quantity controls having a more immediate market impact [3] Supply Dynamics - Nickel production capacity is expected to continue growing, particularly in Indonesia, despite a slowdown in new project launches due to declining nickel prices [4][5] - The MHP production capacity is expanding, while the high-nickel battery market is facing challenges, leading to a subdued performance in the nickel sulfate market [4][5] Demand Outlook - Stainless steel, which accounts for over 60% of nickel demand, is facing pressure due to high nickel iron costs and weak downstream consumption [7] - The electric vehicle sector, a key growth area for nickel demand, is experiencing increased competition, leading to a decline in the market share of ternary batteries [8] Market Forecast - The overall nickel market is expected to remain oversupplied, with prices likely to fluctuate between 110,000 and 128,000 yuan/ton in the second half of the year [9]

Core Viewpoint - The nickel market is experiencing a downward trend in prices due to oversupply, with expectations for the second half of the year to focus on short-selling and selling call options [1][8]. Nickel Price Trends - Nickel prices fluctuated widely in the first half of the year, reaching a high of 136,000 yuan/ton in Q1 due to tight supply and favorable macro conditions, but fell back in Q2 due to oversupply [1]. - The price dynamics were influenced by various factors, including Indonesia's RKAB quota adjustments and the Philippines' export bans, which significantly impacted market reactions [1][2]. Policy Impact on Supply - Indonesian and Philippine nickel policies aim to increase industry revenue, categorized into "quantity" and "price" controls, with quantity controls having a more direct but challenging implementation [2]. - The likelihood of significant supply cuts is low, as both countries face resistance to drastic measures that could impact production and employment [2]. Production and Cost Trends - Nickel iron costs have risen due to tight supply of high-grade nickel ore, while demand from stainless steel has weakened, leading to price pressures [3][4]. - The production capacity of MHP and high-nickel products continues to expand, but the pace of new project launches may slow due to declining nickel prices [3][4]. Demand Dynamics - Stainless steel, which accounts for over 60% of nickel demand, has seen production growth, but overall demand is expected to remain weak due to high inventory levels and lackluster real estate market performance [6][8]. - The electric vehicle sector, a significant source of nickel demand, is facing challenges as competition increases and the market share of lithium iron phosphate batteries rises [7]. Market Outlook - The overall outlook for nickel prices remains bearish, with expectations for seasonal supply increases in Q3 potentially leading to further price declines [8]. - Despite the downward pressure, there may be temporary price increases due to conflicting interests between resource countries and market dynamics [8].