[Ni] CBI Morning Review - 2008/12/15 Nickel Market

SHANGHAI, Dec. 16 (CBI China) -- Yesterday, the dollar index plummeted by nearly 2%, market expects today Fed rate cut of 50 basis points will lead continuous decline in U.S. dollar, however, the U.S. stock has not been lifted, indicating that market confidence was still dragged down by economic fundamentals. As to metal, nickel began to fall after rising for several days due to weak economic data. From data, the Federal Reserve Bank of New York manufacturing index fell to a record low of negative 25.76; in November crude steel production in China fell 12.4%, reaching a new low since 1999; in addition, there exists some uncertainties in the bailout plan for the three major U.S. automakers. 

    As to domestic market, recently steel mills increased their purchase for raw material. It is said that the output of the three major steel mills in December was basically the same as in November, there is no obvious increase; moreover, they had a more pessimistic view to the market outlook. In December the specific output: TISCO 100 kt (300 line 70 kt), Baosteel 40 kt (300 line 25 kt), Zhang Pu 25 kt (300 line 20 kt). 

    Recently, there has been some recovery in steel output in steel mills, which was mainly due to the end-users purchase in advance by the end of the year to meet the need of delivery in the first quarter of next year, in addition, the customers may finish their procurement plans in the first quarter of next year for fear that some private steel mill may sharply decline their output. So a large number of orders piled up to be signed in December, and some goods ordered in December may be delivered in January next year. 
 
    Nickel prices are expected to fluctuate tonight, depending on the decision of Fed interest rates cut. If the interest rates will be reduced by 50 basis points as expected, the dollar may rebound slightly and the nickel prices will be on downward trend; on the contrary, nickel prices are expected to secure some support.

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