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SMM Morning Review – 2011/10/13 Nickel Market
Oct 13,2011 09:56CST
price review forecast
SMM expects that spot nickel prices will move in the RMB 139,500-140,500/mt range on Thursday.

SHANGHAI, Oct. 13 (SMM) -- LME nickel prices opened at USD 18,701/mt and closed at USD 19,043/mt on Wednesday night, up USD 198/mt from a day earlier, with the highest price at USD 19,312/mt and the lowest price at USD 18,650/mt. Daily trading volumes were 1,941 lots, down 241 lots. Positions were 93,932 lots, up 784 lots. Inventories were 91,782 mt, down 720 mt.

LME nickel prices extended downward momentum to hit USD 18,650/mt during the early trading hours, but rallied on significant gains of China’s equity market later. During the remaining trading hours, LME nickel prices advanced moderately between USD 19,000-19,200/mt, hitting a high of USD 19,312/mt, and closed at USD 19,043/mt, up USD 198/mt from a day earlier. Recapitalization of European banks boosted optimistic sentiment and eased market concern to certain extent.

The European Commission has presented a roadmap outlining five areas of action that are interdependent and need to be implemented together and as quickly as possible. Meanwhile, market widely expected that Slovakia's political parties on Wednesday would reach an agreement that would allow the countries' parliament to approve enhancements to the euro zone's bailout fund. Moreover, industrial productivity in the euro zone was far better than market expectation and inflation in France eased to certain extent, relieving market concern over the euro zone. Positive economic news and better than expected economic data boosted the euro and weighed down on the US dollar. In response, base metal rallied along with rising US equity market. China’s State Council unveiled nine measures to support small enterprises, boosting stock market and base metal market. However, current rally in base metal market is mainly attributed to technically rebound after previous excessive decline. Whether nor not base metal market will extend upward momentum shall depend on China’s liquidity condition.

LME nickel prices will continue to fluctuate on Thursday, with great resistance above. Although recapitalization of European banks boosted market confidences to certain extent, the European debt crisis still lacks effective solution. Investors’ remain cautious, and SMM expects that LME nickel prices will fluctuate around USD 19,000/mt on Thursday. In China’s domestic market, overnight LME nickel price increase will support spot nickel prices to certain extent, and SMM expects that spot nickel prices will move in the RMB 139,500-140,500/mt range on Thursday.

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