SHFE nickel posted the day’s strongest move among base metals, rallying 3.05% to 149,310 CNY/mt. The surge was driven by tightening availability of Class I nickel (nickel briquette and cathode) in the Chinese market, with spot premiums over SHFE futures rising to 1,800-2,200 CNY/mt.
LME nickel was steady at $17,930/mt, but the spread between LME and SHFE prices widened to approximately $1,200/mt, creating an arbitrage opportunity that is expected to draw LME metal into China. However, logistics constraints mean the arbitrage will take 4-6 weeks to close.
The Class I market is under pressure from two directions: declining Russian output following sanctions-related maintenance shutdowns, and increasing demand from the aerospace and battery sectors where Class I nickel is mandatory.
LME registered nickel stocks stand at 156,000 tonnes, but only 38% is Class I material deliverable against the LME contract. The rest is nickel pig iron (NPI) and intermediate products not eligible for LME delivery.
The SHFE surge signals real near-term Class I tightness. Aerospace buyers should secure H2 requirements within two weeks. Battery-sector buyers can substitute with nickel sulfate priced off LME, which has not moved as sharply. The arbitrage will eventually pull LME metal into China but expect a 4-6 week lag before SHFE premium normalizes.