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SMM Morning Review - 2011/8/17 Nickel Market
Aug 17,2011 10:00CST
price review forecast
Shanghai spot nickel prices are expected to advance slightly, and will fluctuate in the RMB 164,000-165,000/mt range on Wednesday.

SHANGHAI, Aug. 17 (SMM) -- LME nickel LME nickel for delivery in three months opened at USD 21,500/mt and closed at USD 21,639/mt overnight, up by USD 179/mt from a day earlier, with the highest price at USD 21,725/mt and the lowest price at USD 21,235/mt. Daily trading volumes were 2,401 lots, up by 33 lots. Positions were 89,978 lots, down by 1,207 lots from a day earlier. LME nickel inventories were up by 6 mt to 103,278 mt.

 During the early Asian trading hours, LME nickel prices advanced and hit a high of USD 21,725/mt, but prices began to fall and hit a low of USD 21,235/mt during the afternoon trading hours. Thanks to better-than-expected industrial production data and housing starts from the US, LME nickel prices pared early losses and closed with gains at USD 21,639/mt during the evening trading hours.  Technically speaking, LME nickel prices received certain support at 5-day moving average, and fluctuated narrowly.

Initial GDP for 2Q from the euro zone was up by 0.2% QoQ, and up by 1.7% YoY. Seasonally adjusted GDP growth for 2Q from Germany fell to 0.1%, while revised GDP growth for 1Q from Germany was up by 1.3%.

The US industrial production for July was up by 0.9% MoM, while previous estimation was up by 0.5%. The US housing start for July was down by 1.5%, with an annualized rate of 604,000 units, higher than previous estimation of 600,000 units. Although the data were better than expectation, the US building industry is still below healthy level. Economists believe that housing starts should be around 1.5 million units. In addition, July’s building permits was down by 3.2%, with an annualized rate of 597,000 units, lower than previous estimation of 605,000 units.

Fitch confirmed the US’s AAA credit rating, and put the US’s credit outlook into stable. 

On Wednesday, LME nickel prices opened at USD 21,600/mt. It is expected that market sentiment will be weighed before final outcome of negotiation between Germany and France. SMM expects that LME nickel prices will fluctuate narrowly on Wednesday. Boosted by overnight’s LME nickel price increase, Shanghai spot nickel prices are expected to advance slightly, and will fluctuate in the RMB 164,000-165,000/mt range on Wednesday.

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