SMM Morning Review – 2011/9/8 Nickel Market

SHANGHAI, Sept. 8 (SMM) -- LME nickel prices opened at USD 20,825/mt, and closed at USD 21,798/mt overnight, up USD 971/mt from a day earlier, with the highest price at USD 21,835/mt and the lowest price at USD 20,825/mt. Daily trading volumes were 2,736 lots, up 52 lots from a day earlier. Positions were 88,741 lots, up by 1,671 lots. LME nickel inventories were 100,458 mt, down 1,152 mt from a day earlier.

LME nickel prices were largely on upward track overnight. Boosted by improved market sentiment, positive economic data and Italy’s pass of austerity plan, market concern eased to certain extent, and mitigated risk aversion sentiment weighed down the US dollar. In response, base metal prices rebounded, and price rally of LME nickel price was most pronounced, with LME nickel price up 4.7%. LME nickel prices broke through 5-day moving average and hit a high of USD 21,835/mt, with prices finally closing at USD 21,798/mt.

On Wednesday, according to some reports, President Obama plans to propose sparking job growth by injecting more than 300 billion dollars into the economy next year. In other news, German court tossed out lawsuits aimed at blocking the country's participation in helping Greece and other euro zone countries, improving risk appetite to great extent. In addition, factory orders in Germany were significantly higher than market expectation, also boosting market sentiment. Equity markets rallied both in the European market and US market, with three major stock indexes exceeding more than 3%. Euro advanced, while the US dollar was weighed. Gold slumped from improved risk appetite, while crude oil prices rallied. LME base metal prices closed with gains across the board.

LME nickel prices opened at USD 21,721/mt on overnight's price hike, and growth in LME nickel prices may weaken to certain extent on Thursday, with current target at USD 22,000/mt. In the Shanghai nickel spot market, overnight’s LME nickel price rally will boost spot nickel prices. Close attention should be paid to whether or not Jinchuan Group will adjust its ex-works nickel prices. SMM expects that spot nickel prices will move in the RMB 161,000-162,000/mt range on Thursday.