SMM Morning Review - 2011/8/26 Nickel Market

 SHANGHAI, Aug. 26 (SMM) -- LME nickel LME nickel for delivery in three months opened at USD 20,850/mt and closed at USD 21,020/mt overnight, up by USD 170/mt from a day earlier, with the highest price at USD 21,295/mt and the lowest price at USD 20,849/mt. Daily trading volumes were 1,873 lots, down by 1,144 lots. Positions were 86,197 lots, down by 686 lots from a day earlier. LME nickel inventories were up by 84 mt to 104,010 mt.

LME nickel prices largely fluctuated around USD 21,000/mt overnight, with prices fluctuating relatively narrowly during the Asian trading hours and rallying to USD 21,295/mt from short-recovering during the European trading hours. At the tail of the trading, LME nickel prices fell to USD 21,000/mt and closed at USD 21,020/mt, up by USD 170/mt from a day earlier.

Base metal market was not affected by 1% decline of the US equity market and stronger US dollar, and closed with gains across the board. This is mainly owing to investors’ shifted attention to Asian market and unexpected rally of heavy-weighed bank shares.

The US Department of Labor announced on Thursday, the US initial jobless claim in the week ending on August 20 surged to 417,000, higher than previous estimation of 405,000.

Market expectation and response towards Ben Bernnake’s speech will dominate market movement on Friday when Ben Bernnake will delivery important speech. If Ben Bernnake’s speech hints implementation of QE3, base metal prices are expected advance and the US dollar will weaken and liquidity in the US will increase to great extent.

LME nickel prices meet strong resistance above, and are expected to fluctuate on Friday, as market will be cautious before Federal Reserve’s meeting. In the Shanghai nickel spot market, overnight’s slightly increase of LME nickel prices will boost spot nickel prices to certain extent. However, relatively ample supply of goods will weigh spot nickel prices to certain extent. SMM expects that spot nickel prices will move in the RMB 158,500-159,500/mt range on Friday.