By: Natalie Scott-Gray, Senior Metals Demand Analyst, EMEA and Asia region
Total visible nickel stocks in China remain high even as refined inventories decline modestly, which leaves nickel the weakest performer across the base metals complex. Production is increasing at the same time, and 300 series stainless steel inventories are rebuilding rather than clearing. That combination matters because stainless steel is the single largest end use for nickel, so a slow restocking cycle removes the main mechanism through which surplus metal gets absorbed. The result is a market where a modest drawdown in one inventory measure does very little to change the overall balance.
Natalie Scott-Gray is StoneX Senior Metals Analyst EMEA & Asia, covering London Metal Exchange and battery material metals across Europe, the Middle East, Africa and Asia with more than 12 years of experience in market analysis and price forecasting. She tracks copper, base metals, battery materials, and metals supply and demand, the same flows that set the nickel and stainless steel balance in China.
Nickel is the one base metal where a falling inventory line has not translated into a tighter market. Refined stocks have eased while the wider stock picture has not moved with them, and according to Scott-Gray, "Chinese refined inventories declined modestly, but total visible stocks remain high". Nickel production is rising into that overhang, and 300 series inventories are rebuilding rather than drawing down. Consequently, buyers of nickel and stainless steel are working in a market where availability is comfortable and the incentive to build forward coverage is limited. The contrast with aluminum and Shanghai Futures Exchange lead stocks, both of which are drawing, is what makes nickel stand out.
Supply policy in Indonesia is currently doing more for nickel than Chinese demand is. Indonesian quota decisions govern how much ore and intermediate product reaches the market, so they act as the main constraint on a balance that domestic Chinese consumption is not tightening. Stainless steel demand has not picked up in a way that would clear the rebuilt 300 series inventories, and purchasing behavior reflects that. "Indonesia's quota policy offers some price support, but Chinese demand remains cautious", Scott-Gray says. For commercial buyers, this means the nickel market's floor is being set on the supply side, in contrast with zinc, where deeply negative treatment charges and mine disruptions are squeezing smelter margins directly.
--- Written by Frédéric Guétin, StoneX Media Producer
--- Expert: Natalie Scott-Gray, StoneX Senior Metals Analyst EMEA & Asia
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Nickel is the weakest link in China's base metals complex, with total visible stocks staying high even as refined inventories edge lower. Rising production and slow stainless steel restocking are keeping the pressure on, while Indonesia's quota policy supplies the only real offset.
Natalie Scott-Gray, StoneX Senior Metals Analyst EMEA & Asia, breaks down the base metals week, covering copper and zinc backwardation, U.S. trade escalation with Canada, and the aluminum premium split. She works through why July Chinese economic data missed expectations and what that means for base metals demand, how the new U.S. sanctions program targeting Iranian oil could reach Chinese financial institutions, and why U.S. and Canada tariff escalation hits Rotterdam and U.S. Midwest aluminum premiums rather than global supply.
Copper and zinc are pulling away from a bearish macro backdrop, with London Metal Exchange inventories historically low and spreads tightening in both metals. The result is a physical market where the cost of waiting for metal is rising faster than the headline story suggests.
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