SMM Morning Review - 2011/2/22 Nickel Market

SHANGHAI, Feb. 22 -- LME nickel prices opened at USD 29,150/mt and closed at USD 29,400/mt, up by USD 300/mt from a day earlier, with the highest price at USD 29,425/mt and the lowest price at USD 29,050/mt. Daily trading volumes were 1,303 lots and positions were 99,669 lots. LME nickel inventories were down by 174 mt to 129,222 mt.

LME nickel prices fluctuated widely between USD 29,100-29,400/mt, and hit a 34-month high. Supported by the news that Vales halted production at its Copper Cliff smelter, nickel is the only base metal recording down in inventories at LME.

Turbulence in Arab countries curbed investors' risk appetite. In addition, market concerned that China's recent monetary tightening policy may dampen demand for base metals.

Recently, the vital factor boosting prices is the February's manufacture data from advanced economies like the European and the US. Data from the Euro zone released on February 22nd were strong. February's initial comprehensive PMI in the Euro zone reached 58.4, with PMI in the manufacture sector reaching to 59, the highest in 11 years. Germany IFO Economic Sentiment Indicator for February was also better than estimation. Based on February's manufacture data from the US local Federal Reserve, manufacture indicators to be released at intervals of February and March are still positive.  

Tension in the Middle East will curb industrial production to certain extent, and will weigh base metal prices to certain extent in the short term. However, positive economic data from the US and the Europe will continue support base metal prices. Comprehensively speaking, LME nickel prices will continue to hover at high level due to support from positive fundamentals, with prices pointing to USD 30,000/mt and solid support at USD 28,000/mt. 

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