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SMM Morning Review – 2011/10/11 Nickel Market
Oct 11,2011 09:56CST
price review forecast
SMM expects that spot nickel prices will move in the RMB 140,500-141,500/mt range on Tuesday.

SHANGHAI, Oct. 11 (SMM) -- LME nickel prices opened at USD 19,100/mt and closed at USD 19,550/mt last Friday, up USD 400/mt from a day earlier, with the highest price at USD 19,550/mt and the lowest price at USD 18,651/mt. Daily trading volumes were 1,777 lots, down 408 lots. Positions were 91,951 lots, down 200 lots. Inventories were 93,366 mt, down 900 mt.

LME nickel prices were weighed to hit a low of USD 18,651/mt due to market concern during the Asian trading hours, despite sharp decline in the US dollar. However, during the European trading hours, base metal prices, euro and equity market all rallied on Germany and France’s new plan to recapitalize European banks. In response, LME nickel prices pared losses and presented strong performance. Finally, LME nickel prices closed at USD 19,550/mt, up USD 400/mt from a day earlier.

German Chancellor Angela Merkel and French President Nicolas Sarkozy announced on October 10th that there was an agreement to strengthen European banks to prevent expansion of European sovereign debt crisis. Germany and France had given themselves three weeks to devise a plan to recapitalize banks and find a "durable" solution for Greece's debt load. In addition, manufacture and industrial productivity data announced from Germany and France were far better than market expectation, easing market concern and supporting the euro. In response, the euro rallied and the US dollar fell sharply. With the US three major equity indexes advancing, base metal prices also rallied across the board overnight.

Central Huijin Investment Ltd, an arm of China's sovereign wealth fund, bought shares in four major Chinese State-owned banks on the secondary market on Monday. The four banks include the Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), Bank of China (BOC) and China Construction Bank (CCB), according to the company. Bank share purchase by Central Huijin Investment will stabilize domestic financial market and will boost market confidence to certain extent in the short term.

LME nickel prices opened at USD 19,300/mt on Tuesday, boosted by Europe hopes and bank share purchase by Central Huijin Investment, SMM expects that LME nickel prices will rebound stably on Tuesday. In China’s spot nickel market, overnight 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 140,500-141,500/mt range on Tuesday.

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