SMM Daily Review – 2011/8/22 Nickel Market

SHANGHAI, Aug. 23 (SMM) -- Last Friday, LME nickel for delivery in three months opened at USD 21,250/mt and closed at USD 21,210/mt, down by USD 144/mt from a day earlier, with the highest price at USD 21,589/mt and the lowest price at USD 21,118/mt. On Monday, boosted by weaker US dollar, LME nickel prices advanced all the way and hit a high USD 21,366/mt after opening at USD 21,200/mt during the morning trading hours , but fell to hit a low of USD 21050/mt during the afternoon trading hours. LME nickel prices were still weighed to move below 5-day moving average. LME nickel inventories were up by 120 mt to 103,212 mt.

Jinchuan Group cut ex-works nickel prices by RMB 3,000/mt to RMB 161,000/mt on Monday, dragging down spot prices.  Mainstream traded prices of nickel from Jinchuan Group were in the RMB 162,300-162,500/mt range, and mainstream traded prices of nickel from Russia were in the RMB 161,000-161,500/mt range. Traded prices were relatively firm in the morning trading hours, but fell along with fewer transactions due to LME nickel price decline in the afternoon trading hours. Overall trading sentiment was quiet on Monday. Narrow fluctuation of LME nickel prices fueled wait-and-see sentiment and dampened trading sentiment in the market.

Based on result of an SMM survey on market sentiment, 65% market players believe that LME nickel prices will remain fluctuation trend in the following week, with support at USD 21,200/mt and resistance at USD 22,000/mt. They are holding that although panic sentiment eased to certain extent, investors' concern over economic recovery outlook still haunts market. Growing risk aversion sentiment will continue to weigh base metal prices. 20% market players believe that LME nickel prices will fall below support level and will slip further to USD 20,800/mt. The remaining 15% market players believe that LME nickel prices will rebound to certain extent from technical support. In the Shanghai nickel spot market, prices continue to extend weak momentum, dampening market players’ confidence. Spot nickel prices were not firm and traded prices were also mixed, but Jinchuan Group’s ex-works prices at RMB 161,000/mt supported low-end spot nickel prices to certain extent.