Report Summary 1. Report Industry Investment Rating No information provided regarding the report industry investment rating. 2. Core Viewpoints - Nickel prices are expected to experience wide - range fluctuations due to the information game between Indonesia and the Philippines [1]. - For stainless steel, there are frequent maintenance and production cuts in February, and the cost support center has shifted upward [1]. 3. Summary by Relevant Catalogs 3.1 Fundamental Tracking - **Futures Data**: - The closing price of the Shanghai Nickel main contract is 139,610, with a change compared to T - 1 of 250, T - 5 of 5,180, T - 10 of - 7,860, T - 22 of 1,160, and T - 66 of 20,900 [1]. - The closing price of the stainless - steel main contract is 13,970, with a change compared to T - 1 of - 70, T - 5 of 160, T - 10 of - 615, T - 22 of 180, and T - 66 of 1,545 [1]. - The trading volume of the Shanghai Nickel main contract is 433,838, with a change compared to T - 1 of - 84,787, T - 5 of - 148,686, T - 10 of - 349,437, T - 22 of - 843,852, and T - 66 of 335,590 [1]. - The trading volume of the stainless - steel main contract is 220,012, with a change compared to T - 1 of - 43,037, T - 5 of - 110,145, T - 10 of - 228,480, T - 22 of - 127,542, and T - 66 of 80,309 [1]. - **Industry Chain Data**: - The price of 1 imported nickel is 140,750, with a change compared to T - 1 of 3,000, T - 5 of 5,550, T - 10 of - 3,900, T - 22 of - 250, and T - 66 of 21,750 [1]. - The ex - factory price of 8 - 12% high - nickel pig iron is 1,052, with a change compared to T - 1 of 9, T - 5 of 14, T - 10 of - 3, T - 22 of 71, and T - 66 of 143 [1]. - The price of 304/2B coil - rough edge (Wuxi) Hongwang/Beibuwan is 14,100, with a change compared to T - 1 of 0, T - 5 of 0, T - 10 of - 300, T - 22 of 200, and T - 66 of 1,275 [1]. - The price of battery - grade nickel sulfate is 31,950, with a change compared to T - 1 of 0, T - 5 of - 300, T - 10 of - 1,450, T - 22 of - 900, and T - 66 of 3,505 [1]. 3.2 Macro and Industry News - Indonesia has suspended issuing new smelting licenses through the OSS platform, targeting projects producing "restricted products" such as Nickel matte, MHP, FeNi, and NPI [1]. - Indonesia's energy and mineral resources ministry will revise the benchmark price formula for nickel ore products in early 2026, including treating cobalt as an independent commodity for royalty collection [2]. - Some Indonesian mining companies face potential fines of about 80.2 trillion Indonesian rupiah for illegal occupation of forest land, and the final amount may be lower [2]. - The KPPU found monopoly behavior in the port warehousing and logistics of the IMIP park in Indonesia, and the park is in negotiation [3]. - Indonesia's energy and mineral resources ministry has started approving the 2026 mining work plan and budget (RKAB) for some companies [3]. - The Solway Investment Group plans to restart its nickel mine in Guatemala in a few months due to the rebound of nickel prices and the lifting of restrictions [3]. - The approved nickel ore production quota in Indonesia in 2026 is between 2.6 billion and 2.7 billion tons, and PT WBN received a preliminary notice to submit an RKAB [4]. - Philippine miners claim that the export volume of nickel ore to Indonesia may double [5]. 3.3 Trend Intensity - Nickel trend intensity is 0, and stainless - steel trend intensity is 0, indicating a neutral view [6].

Report Industry Investment Rating - Not provided in the report Core Viewpoints - The fundamentals of refined nickel have undergone a structural shift, but the current and expected overall surplus still restricts the upside of nickel prices. From the end of this year to the first quarter of next year, attention should be paid to the impact of hidden restocking and news from Indonesia. Short - term short - selling at low levels is not recommended, and opportunities for short - selling on rallies in the medium - to - long - term can be considered, combined with options for upside risk protection [1]. - The fundamentals of stainless steel are in a situation of weak supply and demand, and the valuation range is anchored by costs and profits. The steel price is expected to fluctuate at a low level in the short term. Attention should also be paid to the policy risks from Indonesia from the end of this year to the first quarter of next year [2]. Summary by Related Catalogs Nickel Market - **Fundamentals**: Refined nickel is moving towards a pattern of weak supply and demand. The demand for corrosion - resistant alloys is under pressure. Many enterprises have shifted to nickel sulfate production, and the slope of refined nickel inventory accumulation has slowed down, but the overall surplus and the expectation of wet - process production may still drag down nickel prices. Attention should be paid to hidden restocking expectations and news risks from Indonesia [1]. - **Inventory**: This week, China's social refined nickel inventory increased by 1,729 tons to 56,707 tons. LME nickel inventory decreased by 84 tons to 253,032 tons [3]. Stainless Steel Market - **Fundamentals**: The supply and demand of stainless steel are both weak. The production schedule in December decreased to 3.16 million tons, with a cumulative year - on - year increase of 2% and a month - on - month decrease of 8%. The cost center has shifted upward, and the steel price is expected to fluctuate at a low level in the short term [2]. - **Inventory**: On November 30, SMM nickel - iron inventory was 29,346 tons, a month - on - month decrease of 3%. In November, SMM stainless steel factory inventory was 1.588 million tons, a year - on - year increase of 6% and a month - on - month increase of 1%. On December 11, the total social inventory of stainless steel decreased by 1.55% week - on - week [5]. New Energy Sector - **Inventory**: On December 12, the inventory days of upstream, downstream, and integrated production lines of SMM nickel sulfate changed by +1, 0, 0 month - on - month to 5, 9, 7 days respectively. On December 4, the precursor inventory increased by 0.4 week - on - week to 12.8 days. On December 11, the ternary material inventory remained flat at 6.9 days week - on - week [4][5]. Market News - In Indonesia, the forestry working group took over a 148 - hectare nickel mining area of PT Weda Bay Nickel, which is expected to affect a monthly nickel ore production of about 600 metal tons. China suspended an unofficial subsidy for imported copper and nickel from Russia. The Indonesian Energy and Mineral Resources Ministry imposed sanctions on 190 mining companies. The Indonesian government suspended the issuance of new smelting licenses for some products. Some nickel wet - process projects in Indonesian industrial parks will reduce production due to safety inspections [6][8]. - The US President Trump claimed to impose an additional 100% tariff on China and implement export controls on "all key software". 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. China's Ministry of Commerce and General Administration of Customs will implement export license management for some steel products starting from January 1, 2026 [7][8]. Weekly Key Data Tracking - The closing price of the main contract of Shanghai nickel was 115,590, with a change of - 280 compared to the previous day. The closing price of the main contract of stainless steel was 12,565, with a change of +65 compared to the previous day [10].

Core Viewpoint - The global nickel market is expected to remain oversupplied until 2030, driven by a surge in supply from Indonesia and other major producers [1][2] Supply Dynamics - Indonesia's nickel production has increased from 30% of global supply five years ago to 70% currently, with no signs of slowing down [1] - Macquarie forecasts that Indonesia's nickel supply will grow by approximately 16% this year and next, extending into non-nickel pig iron products [1] - Indonesia's nickel production is projected to reach 2.4 to 2.5 million tons this year, with potential capacity increasing to 4 million tons by 2030 [1] - The government of Indonesia is tightening regulations on nickel mining, reviewing environmental permits, and has already seized some mining assets [1][2] Market Conditions - Despite a reduction of 500,000 tons in nickel supply from other regions since 2022, global supply is still expected to grow [2] - Nickel prices have fallen to a low point, with the London Metal Exchange price hitting $15,000 per ton, and many industry players facing negative cash flow at this price [2] - The demand for nickel is shifting towards traditional stainless steel applications as battery usage slows down [2][3] Demand Insights - The stainless steel industry accounts for approximately 65% of nickel demand, showing strong growth due to cheaper nickel prices [4] - In Europe and North America, the impact on the global primary nickel market is limited, with their share being less than 10% [4] - About 55%-60% of nickel production in Europe and North America uses recycled materials, compared to only 15% in China and Indonesia [4]