Recently, the volatile price movements of non-ferrous metals, led by nickel, have drawn intense market attention. From March 7 to 8, nickel futures prices on the London Metal Exchange experienced a violent surge, with cumulative gains reaching 248% over the two-day period. This directly led to the suspension of nickel futures trading on the London Metal Exchange and triggered three daily limit-up sessions and two daily limit-down sessions for Shanghai Nickel on the Shanghai Futures Exchange over a five-day period. As a result, futures prices not only lost their guiding role with respect to spot prices but also created significant obstacles and difficulties for companies engaged in raw material procurement and hedging activities, disrupting the normal production and operations of both upstream and downstream nickel enterprises and causing severe impacts on global nickel and related businesses across the industry chain.

　　Nickel metal is widely used in various sectors, including military-industrial manufacturing (such as aircraft and radar systems), civilian machinery manufacturing, and the electroplating industry. Duan Shaofu, Director of the Heavy Metals Department at the China Nonferrous Metals Industry Association, stated that the price disparity—high prices internationally but low prices domestically—impacts the sustainable development of China’s nickel and related industries. Although China is the world’s largest consumer of nickel, it is severely lacking in nickel resources, with its dependence on foreign sources for raw materials exceeding 90%. Moreover, the pricing benchmark for China’s imported nickel raw materials generally follows the nickel futures on the London Metal Exchange. This “high abroad, low at home” situation will reduce domestic enterprises’ enthusiasm for imports, disrupt the supply of raw materials, hinder the transformation of China’s industrial chain advantages into economic strengths, and further undermine the steady growth of China’s industrial economy.

　　Experts believe that the sharp rise in nickel prices this round is the result of multiple factors. The increasing uncertainty in the global political and economic landscape has led to spillover risks in the commodity markets, intensifying imported inflationary pressures. Coupled with the impact of the pandemic, increased environmental protection investments, and rigidly rising production costs, these factors have kept bulk raw material prices at relatively high levels overall. Meanwhile, downstream consumption continues to recover rapidly, leaving the market in a generally tight balance between supply and demand.

　　Duan Shaofu believes that comprehensively enhancing the stability and security of China’s nickel supply chain is the fundamental solution to addressing the irrational rise in nickel prices, ensuring the security of China’s nickel and other mineral resources, and responding effectively to sudden events such as the “nickel futures incident.”

　　Currently, the fundamental situation in China—characterized by long-term positive prospects for the development of minerals such as nickel and the continued large-scale import of raw materials—will not change. Therefore, it is imperative to systematically plan and develop a national reserve system. The government and key enterprises should explore establishing a reserve system that integrates strategic reserves with commercial reserves, taking into account both overall coordination and long-term strategic considerations. This will effectively help prevent and mitigate various risks and challenges, further safeguard supply-chain security across the entire industrial chain, and promote the establishment of a diversified strategic mineral resource reserve system.

　　The country has repeatedly sent strong policy signals that it will continue to ensure the stable supply and prices of bulk commodities. The China Nonferrous Metals Industry Association has also issued numerous appeals, emphasizing its firm commitment to maintaining a stable and orderly nonferrous metals market. The Association will earnestly follow the requirements set forth by the Party Central Committee and the State Council regarding ensuring the stable supply and prices of bulk commodities, closely monitor industry trends, promptly report recommendations to relevant authorities, and warn enterprises about potential risks.

　　Duan Shaofu suggested that enterprises in the nonferrous metals industry should voluntarily implement the "Self-Discipline Covenant for China's Nonferrous Metals Industry," strengthen industry self-discipline, stabilize market expectations, maintain orderly market pricing, prevent malicious speculation and irrational sharp rises in nonferrous metals prices, and make every effort to ensure the smooth and healthy operation of the domestic economic loop.

　　The nonferrous metals industry exhibits typical characteristics of marketization, internationalization, and financialization. Nonferrous metals enterprises must enhance their awareness of risk prevention and improve their proficiency in using risk management tools. As companies “go global,” they should thoroughly familiarize themselves with international market rules and develop comprehensive contingency plans for responding to unexpected events.

　　Experts said that the “nickel futures incident” highlights the importance and urgency of advancing the internationalization of futures contracts for related non-ferrous metal commodities. The next step is to accelerate the internationalization of China’s nickel futures and enhance China’s pricing power in the commodity markets.

“Under top-level design, if we can adopt a market-oriented pricing model featuring ‘an international platform, bonded delivery, net-price trading, and RMB-denominated pricing,’ not only will this help establish China’s image as a staunchly market-oriented trader and enhance our country’s pricing capabilities for bulk commodities, but it will also reduce hedging risks faced by Chinese-funded enterprises operating overseas,” said Duan Shaofu. “I recommend strengthening research on changes and trends in the nickel industry landscape and accelerating the development of nickel-related futures products.”

　　In recent years, most of the new nickel mining investment projects worldwide have been led by Chinese enterprises. The implementation of overseas projects by Chinese-funded companies directly affects the stability of the global nonferrous metals market. Compared with its share in production, consumption, and market presence, China’s role in relevant international organizations remains relatively weak. “We recommend strengthening support for industry associations’ participation in international organizations, so that China can better voice its position,” said Duan Shaofu. (Economic Daily)