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SMM Morning Review – 2011/10/12 Nickel Market
Oct 12,2011 09:50CST
price review forecast
SMM expects that spot nickel prices will move in the RMB 139,500-140,000/mt range on Wednesday.

SHANGHAI, Oct. 12 (SMM) -- LME nickel prices opened at USD 19,300/mt and closed at USD 18,845/mt on Monday, down USD 705/mt from a day earlier, with the highest price at USD 19,401/mt and the lowest price at USD 18,656/mt. Daily trading volumes were 2,182 lots, up 405 lots. Positions were 93,148 lots, up 1,197 lots. Inventories were 92,502 mt, down 864 mt.

LME nickel prices fluctuated narrowly during the Asian trading hours on Tuesday night, but fell to hit a low of USD 18,656/mt due to investors’ concern that Slovakia may not agree on expanding the euro zone rescue fund. Finally, LME nickel prices closed at USD 18,845/mt, down USD 705/mt from a day earlier.

On Tuesday night, Slovakia did not pass the vote on expanding the powers of the European Financial Stability Facility (EFSF), dashing the hope for any relief of the European debt crisis. In addition, European Central Bank President Jean-Claude Trichet talked up the risk for contagion and warned that the debt crisis has reached ' systemic dimension.' In this context, market sentiment turned pessimistic. Moreover, the US Parliament passed 2011 Currency Exchange Rate Supervision Reform Bill, which required the US government to levy punishment tax on major trader partners whose exchange rate was underestimated, pressing the RMB to accelerate appreciation pace. The bill will inevitably affect exports of Chinese products and dampen demand for Chinese products. Bank share purchase by Central Huijin Investment only had short-lived impact on market, and equity market was generally weighed.

LME nickel prices closed with significant losses on Tuesday night, with prices nearly hitting 10-day moving average. SMM expects that LME nickel prices will test sustainability at USD 10-day moving average and may fall further, with support at USD 18,000/mt. In domestic nickel spot market, LME nickel price decline will drag down spot nickel prices, and SMM expects that spot nickel prices will move in the RMB 139,500-140,000/mt range on Wednesday.

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