SMM Morning Review - 2011/3/30 Nickel Market

SHANGHAI, Mar. 30 (SMM) -- LME nickel contract for delivery in three months opened at USD 26,100/mt and closed at USD 26,600/mt over night, down by USD 871/mt from a day earlier, with the highest price at USD 26,690/mt and the lowest price at USD 26,020/mt. Daily trading volumes were 1,439 lots and positions were 106,283 lots. LME nickel inventories were up by 397 mt to 124,506 mt.                                                      

LME base metal prices closed with gains on Tuesday, as the US dollar weakened and concern over tight monetary policy from the US relieved to certain extent. LME nickel futures contract for delivery in three months firstly slipped but later rallied, with prices hitting the lowest at USD 26,000/mt. However, LME nickel prices pared early losses during the European trading hours, with prices finally closing around USD 26,600/mt on March 30. At present, LME nickel prices are still weighed by daily moving average, and fluctuated weakly.

Lower-than-expected US consumer confidence unexpectedly boosted base metals, as the US dollar slipped and since concern over the Federal Reserves' tight monetary policy eased to certain extent. The US Conference Board released March's consumer confidence index of 63.4 and the revised data for February was 72.0, while market previous estimation was 63.0.

According to latest monitor, Japan's nuclear crisis is still severe. Investors' attention refocused on its latest development. In addition, China is expected to adopt prudent monetary policy and may increase interest rate near this weekend, which also becomes one of recent market focuses. SMM believes that LME nickel prices will remain volatile on March 30, with current resistance at USD 27,000/mt, and support at USD 26,000/mt. Demand was weak in domestic spot market, but spot nickel prices are expected to advance from overnight LME nickel price rally. SMM expects that spot nickel prices will increase to certain extent, and Jinchuan Group's ex-works prices at USD 195,000/mt will lend certain support to spot prices.

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