SMM Morning Review - 2010/2/9 Nickel Market

SHANGHAI, Feb. 9 (SMM) --

LME tin market opened at USD 28,300/mt and closed at USD 28,350/mt on Febuary 8th, up by USD 50/mt from a day earlier, with the highest price at USD 28,430/mt and the lowest price at USD 27,540/mt. Daily trading volumes were 3,116 lots and positions were 97,778 lots. LME nickel inventories were 132,936 mt, up by 108 mt. Cancelled warrants were 5,940 mt, accounting for 4.47%% of total inventories.

LME nickel prices fluctuated around USD 28,000/mt during the Asian trading hours, totally up by USD 426/mt from that on February 1st. The US dollar index began to rebound slightly and closed at 77.993 on Wednesday, fluctuating narrowly around 78.  LME base metal prices mostly ended with gains on Tuesday, but trading sentiment was cautious as China’s central bank raise benchmark interest for the first time after Chinese New Year holiday. However unrest ceased and trading sentiment stabilized to certain extent after the news was absorbed. LME nickel prices slipped due to impact from interest rate hike, but later reserved decline trend.

China’s central bank raised benchmark interest rate hike for the first time after Chinese New Year holiday, also the second time of its kind in six months. China is strengthening efforts to curb inflation, which is expected to curb demand for raw material. Many market insiders don’t believe that interest rate hike will exert negative impact on commodity prices in the long term, as such interest rate adjustment will to significantly dampen upward momentum in economic growth.

Market shall closely watch China’s CPI to be released next week, which may trigger more stern measures from China. Asian market will resume transaction after the Chinese New Year holiday, and interest rate hike from China may dampen upward momentum in the market in the short term and may curb base metal prices from soaring. Oversupply and continuous expanding of NPI will be the major factors dragging down nickel prices. SMM expects that LME nickel prices will move around USD 28,000/mt on February 9th.

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