Nickel futures on the Shanghai exchange opened at 127,000 yuan per tonne on September 1, 2026, closing at 128,070 yuan per tonne, a 0.45% change from the previous trading day's settlement price. Trading volume reached 186,951 lots, down 62,425 lots from the prior session, while open interest stood at 131,544 lots, a decrease of 17,795 lots.
Indonesian policy developments are entering an intensive phase of negotiation, with easing expectations continuing to build momentum. The government has also signaled potential expansion of export oversight measures. The ESDM has confirmed that the RKAB quota system will remain unchanged regarding its annual review process, rather than shifting to a three-year approval cycle as previously recommended by the nickel industry association. Applications for the 2027 annual RKAB are scheduled to commence in October, with some companies already beginning preparations, although certain mid-cycle quotas for 2026 still await approval. Meanwhile, the Philippine President has signed an executive order establishing a unified policy framework for the critical minerals sector, encouraging investment in downstream nickel industries including refining, processing, and battery manufacturing.
On the supply side, the implementation of the new HPM policy and tightening sulfur availability have kept sulfur prices elevated in the near term, though marginal softening has emerged. Heightened price sensitivity has resulted in a looser MHP market balance with downward pressure on MHP coefficients, while high-grade matte coefficients have remained steady. Sentiment in the high-grade nickel pig iron market has turned increasingly cautious, weighed down by restoration expectations for supply and cautious downstream purchasing behavior.
On the demand front, the traditional off-season for stainless steel has left end-user demand subdued. Pre-orders typically associated with the "golden September and silver October" peak season have not materialized as expected, with transactions experiencing only brief improvement before returning to lackluster levels. Steel mills have notably softened their price support this week, with spot quotations following the futures decline. Profit margins for 304 cold-rolled products continue to deteriorate, exacerbating cost inversions for mills. The economic advantage of scrap stainless steel continues to narrow, compounded by tax invoice complications, thereby weakening the substitution benefit.
In the new energy sector, cathode material production and demand continue to register modest month-on-month growth. Ternary cathode material output reached 91,090 tonnes in August, up 2.1% from the previous month, though downstream enterprises remain cautious in their purchasing, primarily meeting rigid demand requirements.
Regarding nickel ore: according to Mysteel, while ore costs have shown some flexibility, the underlying support remains intact, limiting the risk of a cost collapse. From the Philippines, the CIF price for 1.3% nickel ore at Lianyungang held steady at 47.5 US dollars per wet metric tonne, unchanged from the prior session. Indonesian domestic ore prices showed slight weakness, with the CIF price for 1.6% grade falling to 65.77 US dollars per wet metric tonne, down 1.00 US dollar per wet metric tonne from the previous trading day.
In the spot market, Jinchuan nickel premiums maintained elevated levels, while discounts on electric nickel brands narrowed modestly. Imported brand premiums held steady. Overall trading activity remained subdued, with participants focusing on rigid demand procurement. Inventory at 30 Chinese warehouses of refined nickel decreased by 1,910 tonnes to 125,537 tonnes, a decline of 1.50%. Port inventories of nickel ore across 14 Chinese ports increased by 318,900 wet metric tonnes week-on-week to 12.435 million wet metric tonnes, a gain of 2.63%. Specifically, the Jinchuan nickel premium changed by 100 yuan per tonne to 1,600 yuan per tonne, imported nickel premiums remained flat at -50 yuan per tonne, and nickel briquette premiums stood at 50 yuan per tonne. Shanghai exchange nickel warrants totaled 100,096 tonnes in the prior session, down 840 tonnes, while LME nickel inventories reached 268,536 tonnes, up 174 tonnes.
On the macroeconomic front, markets continue to digest hawkish signals, with CME FedWatch indicating the probability of a September rate hike has risen further to 66.4%. Escalating conflict in the Middle East has driven oil prices and inflation expectations higher, prompting continued selling in long-duration global bonds. Elevated interest rates continue to constrain upside potential for non-ferrous metals. The situation in the Middle East has intensified with direct military engagement between the US and Iran, pushing energy prices upward and causing sulfur prices to climb once again. The risk premium that had been unwinding following earlier Iran-Oman negotiations has reversed, reigniting concerns over the HPAL supply chain. Domestically, China's August PMI improved marginally to 49.8 from July's 49.2.
Strategy considerations should focus on Indonesia's medium-term RKAB quotas and developments in US rate hike expectations. Current supply-demand fundamentals remain weak, with policy and macroeconomic factors serving as the primary drivers for nickel price movements. Expectations of relaxed Indonesian policy, a strengthening US dollar, and elevated inventory levels cap upside potential, while smelting costs and thin margins provide support from below. Given the persistent volatility in the Middle East situation, nickel prices are expected to fluctuate with a downward bias. Attention should be paid to subsequent developments in Indonesian quotas and the correlated movements across macroeconomic factors and the broader non-ferrous complex.
For single-leg positioning: range trading is recommended. Inter-period spreads: none. Cross-commodity spreads: none. Physical-futures arbitrage: none. Options: none. Risks include changes in domestic related economic policies, Indonesian policy shifts, and fluctuating statements from the US President.
Stainless steel futures opened at 13,885 yuan per tonne and closed at 13,825 yuan per tonne on September 1, 2026. Trading volume was 153,813 lots, down 16,806 lots from the previous session, while open interest was 108,978 lots, a decrease of 4,171 lots.
The stainless steel market is experiencing heightened contradictions as the off-season draws to a close. On the fundamentals side, the EU has implemented its new steel trade mechanism, setting stainless steel quotas and raising additional tariffs beyond quota levels, while also establishing rules of origin based on "melting and casting" criteria. The State Council has issued the 15th Five-Year Plan for Urban Renewal, guiding cities to pursue composite transformation and drive trillion-yuan investments in urban renewal projects.
On the supply side, mills' high production schedules continue to expand month-on-month, though significant divergence exists across product categories. Total domestic crude stainless steel production for August is projected to reach 3.6914 million tonnes, up 3.11% month-on-month and 11.33% year-on-year. Within this, 200-series production is expected to increase by 171,400 tonnes, while 300-series output is projected to decline by 137,000 tonnes. Indonesian stainless steel production for August is estimated to fall 12.7% month-on-month, resulting in a modest overall increase in total supply.
On the demand side, after a six-month hiatus, Shanghai has introduced new property market policies. Six municipal departments jointly issued a notice on optimizing real estate policy measures, introducing eight initiatives aimed at facilitating "selling old and buying new" transactions. Traditional stainless steel consuming industries remain sluggish, though the rate of decline has improved somewhat. In July, new residential property prices in first-tier cities fell 1.1% year-on-year, with the decline narrowing by 0.2 percentage points from the previous month. Second-tier cities saw a 2.8% year-on-year decline, narrowing by 0.3 percentage points, while third-tier cities recorded a 4.2% year-on-year decrease, unchanged from the prior month. China's fixed asset investment fell 6.7% year-on-year in the January-July period. Value-added output from industrial enterprises above designated size grew 4.5% year-on-year in July, with a 0.11% month-on-month increase.
Production schedules for the three major home appliance categories in August 2026 total 28.33 million units, down 6.3% from actual production during the same period last year. By product category, August home air conditioner production is scheduled at 10.73 million units, down 16.7% from year-ago actual output; refrigerator production is planned at 8.77 million units, a modest 0.7% increase; and washing machine production is scheduled at 8.83 million units, up 2.3% from the corresponding period last year. Traditional sectors lack momentum for large-scale inventory replenishment, with demand predominantly confined to rigid requirements.
In the spot market, futures prices fluctuated downward while spot quotations remained weak but stable. Transactions continued to focus on rigid demand procurement with subdued activity. Stainless steel prices in the Wuxi market stood at 14,400 yuan per tonne, down 100 yuan, while Foshan market prices were 14,400 yuan per tonne, down 75 yuan. The 304/2B premium-discount range was 475 to 875 yuan per tonne. According to SMM data, the average ex-works price including tax for high-grade nickel pig iron declined by 2.00 yuan per nickel point to 1,114.5 yuan per nickel point.
Strategy outlook: supply growth expectations on the fundamental side outweigh demand, though cost support remains intact. Macroeconomic and policy influences are becoming the primary drivers for stainless steel movements. In the near term, stainless steel will continue to track nickel price trends and is expected to maintain a rangebound pattern. Single-leg positioning: neutral. Inter-period spreads: none. Cross-commodity spreads: none. Physical-futures arbitrage: none. Options: none. Risks include changes in domestic economic and real estate policies, Indonesian policy shifts, and fluctuating statements from the US President.