SMM Morning Review - 2011/8/9 Nickel Market

SHANGHAI, Aug. 9 (SMM) -- LME nickel LME nickel for delivery in three months opened at USD 22,525/mt and closed at USD 21,401/mt overnight, down by USD 1,299/mt from a day earlier, with the highest price at USD 22,600/mt and the lowest price at USD 21,401/mt.  Daily trading volumes were 6,878 lots, up by 845 lots. Positions were 91,762 lots, up by 479 lots from a day earlier. LME nickel inventories were down by 78 mt to 102,576 mt.

The downward adjustment of the US credit rating triggered panic sentiment in global financial markets. In this context, LME nickel prices continued to fall significant and closed at USD 21,401/mt, down by 5.7% from a day earlier. LME nickel prices fell rapidly to USD 21,900/mt after opening and later move relatively stable, but slumped to hit a low of USD 21,200/mt during the evening trading hours due to slumps in the US equity markets. 

The US equity market tumbled on Monday, with three major equity indexes down by 5%. Panic sentiment triggers sell-offs of risk assets, with the euro falling sharply and the US dollar advancing slightly. Concern over global economic recovery continued to weigh down on oil prices, while gold prices hit at historical high and stood above USD 1,700/ounce due to risk aversion sentiment. 

In the short term, market shall continue to be haunted by concern over the US debt issue and global economy recovery, and risk aversion sentiment will dominate market. LME nickel prices opened at USD 21,255/mt on Tuesday, and are expected to fall further. A technical correction is possible and decline in LME nickel prices will slow down. SMM expects LME nickel prices will test support at USD 21,000/mt on Tuesday.  Shanghai nickel spot prices are expected to slip along with LME nickel prices, and will move in the RMB 165,000-166,000/mt range on Tuesday. Close attention should be paid whether or not Jinchuan Group will cut ex-works nickel prices today.