SMM Morning Review – 2011/10/14 Nickel Market

SHANGHAI, Oct. 14 (SMM) -- LME nickel prices opened at USD 18,950/mt and closed at USD 18,411/mt on Thursday night, down USD 632/mt from a day earlier, with the highest price at USD 19,071/mt and the lowest price at USD 18,300/mt. Daily trading volumes were 2,678 lots, up 737 lots. Positions were 95,065 lots, up 1,133 lots. Inventories were 91,020 mt, down 762 mt.

LME nickel prices struggled around USD 19,000/mt during the Asian trading hours overnight. During the evening trading hours, LME nickel prices fell rapidly below USD 18,500/mt, hitting a low of USD 18,300/mt, and closed at USD 18,411/mt, down USD 632/mt from a day earlier. China’s trade data released overnight was disappointing. Meanwhile, waning optimism in the euro zone and uninspiring employment report from the US dampened market confidence and dragged down base metal prices.

Standard and Poor’s cut sovereign credit rating of Spain overnight, weighing down on LME base metals. Later came the positive news that Slovakian parliament approved expanding the European Financial Stability Facility on Thursday. China’s National Bureau of Statistics will release a series of economic indicators on Friday, and it is expected that September’s CPI may be flat or slightly lower from a month earlier. Meanwhile, Huijin Investment's purchase of stocks of China’s four state-owned banks, and State Council’s supportive measures for small and medium sized enterprises indicated that China’s tight monetary policy may ease to certain extent, which will improve liquidity in the market and will boost buying in base metal market.

Market is focusing on the release of China’s September CPI, and market expects that Septembers’ CPI may be flat or slightly slower from a moth earlier. SMM expects that LME nickel prices will advance to certain extent if China's CPI falls within market expectation. In China' s domestic nickel spot market, spot nickel prices will be dragged down by overnight LME nickel price decline and may move in the RMB 138,500-139,500/mt range on Friday.