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SMM Morning Review - 2010/1/8 Nickel Market
Jan 8,2010 11:13CST
smm insight

SHANGHAI, Jan. 8 (SMM) -- Yesterday, LME nickel prices opened at USD 19,050/mt, with highest and lowest level at USD 19,375/mt and USD 18,300/mt, respectively, and finally prices ended at USD 18,300/mt.  Total trading volumes reported 1,723 lots, and positions were 98,162 lots.

The US Department of Labor released on Thursday that the number of initial application for unemployment benefits increased to 434,000 last week, lower than the estimate of 447,000. Tonight, the US will release non-farm employment data, and investors adopted a cautious attitude, and Dow Jones Index fluctuated. However, LME futures market pared previous strong upward momentum, since yesterday the State-owned Assets Supervision and Administration Commission urged China's state firms must be careful when investing in the property, stock and futures markets, and China's central bank auctioned RMB 60 billion of three-month bills at a yield of 1.3684%, higher than previous levels, triggering concerns of tightening lending, and SHFE markets plunged after opening high as a result, which in turn resulted in the upward movement in LME futures prices. The US dollar index advanced to 78 again, and will show a clear direction after the US non-farm employment data is released today.

Market concerns increased after previous strong optimistic sentiment, and expectations of lending restrictions strengthened as well, and base metals prices are expected to experience short-term corrections, but will remain optimistic in the long run, since the economic recovery will help boost consumption of base metals. SMM predicts LME nickel prices will show strong performance in the long term, but will undergo corrections today, with prices expected to move in the USD 18,000-18,600/mt range.


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