SMM Morning Review – 2011/9/30 Nickel Market

SHANGHAI, Sept. 30 (SMM) -- LME nickel prices opened at USD 18,015/mt and closed at USD 18,650/mt overnight, up USD 500/mt from a day earlier, with the highest price at USD 18,825/mt and the lowest price at USD 17,880/mt. Daily trading volumes were 2,364 lots, up 203 lots. Positions were 91,989 lots, down 628 lots. Inventories were 97,164 mt, down 128 mt.

LME nickel prices slipped slightly to USD 17,880/mt after opening, but later advanced from weaker US dollar support. During the European trading hours, market sentiment eased to certain extent, as Germany’s lower house of parliament passed proposal for expansion of euro zone rescue fund and since economic data from the US were positive. In response, LME nickel prices hit a high of USD 18,825/mt and closed at USD 18,650/mt, up USD 500/mt from a day earlier.

On Thursday, market sentiment was boosted, as Germany’s lower house of parliament passed proposal for expansion of euro zone rescue fund and since economic data from the US were positive. However, Fitch’s unexpectedly cut credit rating of New Zealand, casting a shadow over market outlook. The euro advanced, while the US dollar was weighed down. Equity markets in Europe and the US largely closed with gains, and prices of gold and crude oil fluctuated higher. LME base metal prices also rallied across the board. Although market sentiment eased to certain extent, market trend remained unclear. It is expected domestic market sentiment will be cautious during the last pre-holiday trading days and ahead of the released of HSBC’s final China PMI on September 30th and release of China’s official PMI on October 1st.

It is expected that LME nickel prices will continue to rebound on Friday, from eased market sentiment, but price growth will be capped to certain extent due to macroeconomic uncertainties. SMM expects that LME nickel prices will target USD 190,000/mt on Friday. In domestic nickel spot market, overnight LME nickel price rally will boost spot nickel prices, and SMM expects that spot nickel prices will move in the RMB 140,000-141,000/mt range on Friday.