SMM Morning Review – 2011/9/6 Nickel Market

SHANGHAI, Sept. 6 (SMM) -- LME nickel prices opened at USD 21,500/mt, and closed at USD 20,995/mt overnight, down by USD 465/mt from a day earlier, with the highest price at USD 21,600/mt and the lowest price at USD 20,741/mt. Daily trading volumes were 2,354 lots, up 168 lots from a day earlier. Positions were 86,500 lots, up by 409 lots. LME nickel inventories were 102,408 mt, down 882 mt from a day earlier.

LME nickel prices advanced to USD 21,600/mt during the morning Asian trading hours. However, depressed by weaker-than-expected economic data from the euro zone and the US, coupled with weak economic condition in the Europe and unsolved European debt crisis, base metal prices were weighed down to hit a low of USD 20,741/mt. LME nickel prices closed at USD 20,995/mt, down by USD 465/mt or 2.2% from a day earlier.

August's PMI for service sector announced on Monday from China, euro zone members and the UK were generally sluggish. The concern over global economic recovery outlook triggered equity slumps both in Asian and European markets. Political turbulence in Germany, coupled with Moody’s possible cut of Italian sovereign credit rating, intensified investors’ concern over the European debt issue. In response, growing risk aversion sentiment weighed down the euro, while the US dollar advanced above 75. Spot gold closed with mild gains, and NYMEX crude oil for delivery in October was down by 2.84%.

LME nickel prices opened low at USD 20,800/mt on Tuesday. Renewed European debt crisis, combined with concern over economic slowdown from weak PMI from various countries and downbeat non-farm employment data from the US, LME nickel prices are expected to extend weak momentum and may slip further, with support at USD 20,200/mt. In the Shanghai nickel spot market, overnight's LME nickel price slump will drag down spot nickel prices. Close attention should be paid to whether or not Jinchuan Group will adjust ex-works nickel prices. SMM expects that spot nickel prices will move in the RMB 160,000-161,000/mt range on Tuesday.