SMM Morning Review - 2011/1/5 Nickel Market

SHANGHAI, Jan. 5 (SMM) -- LME nickel market opened at USD 24,850/mt and closed at USD 25,000/mt overnight, up by USD 50/mt from a day earlier, with the highest price at USD 25,300/mt and the lowest price at USD 24,800/mt. Daily trading volumes were 2,730 lots and positions were 95,877 lots. LME nickel inventories were 136,890 mt, up by 1,218 mt. Cancelled warrants were 4,062 mt, accounting for 2.97% of total inventories.

Support from higher stock markets and increasingly positive demand prospects was offset by a slump in the euro and easing supply concerns. According to meeting minute announced by Federal Reserve last Tuesday, officials believed that recovery of the US economy was still weak and monetary policy support is still needed, despite that economy recovery signs were increasing. In this context the US dollar index may continue rebounding and move higher in the short term, which will exert certain pressure on metal prices. Therefore, LME nickel prices will remian volatile at high level. Adjustment of S&P GSCI spot commodities index (S&PGSCI) and Dow Jones-UBS Commodity Index in January may trigger price fluctuation as some large funds buying is based on these two indexes. Close attention should still be paid to non-farm employment data.

SMM predicts that LME nickel prices will move around USD 25,000/mt on January 5th.

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