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SMM Morning Review – 2011/10/10 Nickel Market
Oct 10,2011 09:55CST
price review forecast
SMM expects that spot nickel prices will largely move in the RMB 141,000-142,500/mt range on Monday.

SHANGHAI, Oct. (SMM) -- LME nickel prices opened at USD 19,003/mt and closed at USD 189,150/mt last Friday, up USD 100/mt from a day earlier, with the highest price at USD 19,255/mt and the lowest price at USD 18,607/mt. Daily trading volumes were 2,185 lots, up 594 lots. Positions were 92,151 lots, down 810 lots. Inventories were 96,738 mt, down 426 mt.

Boosted by better-than-expected employment data from the US, market concern eased to certain extent. LME nickel prices fluctuated widely, hitting a high of USD 19,255/mt and slipping to a low of USD 18,607/mt. Finally, LME nickel prices closed at USD 19,150/mt, up USD 100/mt from a day earlier. LME nickel prices presented mixed performance during China’s National Day holiday, but were largely on upward track, up 8.3%.

On Oct. 7th, Fitch Ratings downgraded its long-term IDR rating on Italy from 'AA-' to 'A+', outlook negative, and short-term rating lowered from 'F1+' to 'F1'. The downgrade reflects the intensification of the Euro zone crisis that constitutes a significant financial and economic shock which has weakened Italy's sovereign risk profile.

The rating agency Moody's on Friday cut ratings of 12 British banks, raising investors' concerns about the health of European banks. Meanwhile, Moody’s also downgraded independent rating of 6 Portuguese banks, which was mainly due to deteriorating assets and increasing sovereign bond risks and tight liquidity of these banks.

The US department of Labor announced on Friday the non-farm payroll report for September showed that 103,000 jobs were added, which were better than expected. Non-farm payroll for August and July was also revised upward. The US unemployment rate remained at 9.1% for three consecutive months. The better-than-expected data boosted market sentiment, but Fitch Ratings’ downgrade adjustment of Spanish bond rating re-fueled market concern over the European debt crisis and capped price growth of base metals.

Under the backdrop that the European debt crisis continued to deteriorate, and the US economic condition did not improve, investors concern remained. Coupled with advance in the US dollar, it is expected that LME nickel prices will continue to fluctuate weakly around USD 19,000/mt on Monday. In domestic nickel spot market, as LME nickel prices have rebounded limitedly during China’s National Day holiday, SMM expects that spot nickel prices will largely move in the RMB 141,000-142,500/mt range on Monday.

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