SMM Morning Review - 2011/2/10 Nickel Market

SHANGHAI, Feb. 10 (SMM) -- LME nickel market opened at USD 28,225/mt and closed at USD 28,400/mt overnight, up by USD 50/mt from a day earlier, with the highest price at USD 28,800/mt and the lowest price at USD 28,035/mt. Daily trading volumes were 2,137 lots and positions were 98,923 lots. LME nickel inventories were down by 606 mt to 132,330 mt. Cancelled warrants were 5,358 mt, accounting for 4.05% of total inventories.

LME base metal prices largely ended with losses on Monday. LME nickel prices moved stably during the Asian trading hours, and received support from weak US dollar index in the evening, with prices reaching the highest at USD 28,800/mt but slipping at the tail of the trading.

Market concerned that China’s interest rate hike may dampen demand for industrial base metals and may curb base metal prices to certain extent, but impact from interest rate hike gradually waned and price decline is limited under the context of high inflation and over supply of money. However, some market players may withdraw the market and adopt a wait-and-see attitude due to uncertainties of China’s new policy as well as possible further tightening measures in 2011.

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 of nickel and continuous expanding of NPI will be the major factors dragging down nickel prices. SMM expects that LME nickel prices will continue to move around USD 28,000mt on February 10th. 

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