SMM Morning Review – 2011/9/5 Nickel Market

SHANGHAI, Sept. 5 (SMM) – LME nickel prices opened at USD 21,700/mt, and closed at USD 21,460/mt on Friday night, down by USD 315/mt from a day earlier, with the highest price at USD 21,807/mt and the lowest price at USD 21,225/mt. Daily trading volumes were 2,186 lots, up 140 lots from a day earlier. Positions were 86,091 lots, up by 467 lots. LME nickel inventories were 103,290 mt, down 1,212 mt from a day earlier.

LME nickel prices largely fluctuated narrowly and slightly slipped during Friday’s Asian trading hours, owing to stronger US dollar. LME nickel prices largely fluctuated narrowly around USD 21,600/mt during the early European trading hours, but were weighed down to hit a low of USD 21,225/mt as announcement of weaker than expected non-farm employment data fueled concern over the US economic recovery. LME nickel prices finally closed at USD 21,460/mt, down by USD 315/mt from a day earlier, and found certain support at 10-day moving average.

The US non-farm employment data for August announced on last Friday was flat, the lowest since September 2010, and unemployment rate for August was unchanged at 9.1%. The weak employment data fueled market expectation that the US economy may slip into another recession. In this context, the equity markets in the Euro zone and the US fell sharply. Euro and other commodity currencies were weighed, while the US dollar closed with slight gains. Risk aversion sentiment pushed gold prices to advance by almost USD 50/mt, near historical high. Light crude for delivery in October at NYMEX fell by USD 2.48/ballel.

It is expected that base metal market will continue to be weighed by lower-than-expected non-farm employment data from the US and the ongoing European debt crisis. LME nickel prices fell below USD 22,000/mt again, and are expected to fluctuate around USD 21,500/mt on Monday. In the Shanghai nickel spot market, close attention should be paid to whether or not Jinchuan Group will adjust ex-works nickel prices. Friday’s LME nickel price decline will drag down spot nickel prices to certain extent, and SMM expects spot nickel prices will move between USD 161,500-162,500/mt on Monday.