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SMM Morning Review – 2011/10/17 Nickel Market
Oct 17,2011 09:59CST
price review forecast
It is expected that spot nickel prices will move between RMB 139,000-140,500/mt on Monday.

SHANGHAI, Oct. 17 (SMM) -- LME nickel prices opened at USD 18,450/mt and closed at USD 18,925/mt on last Friday, up USD 514/mt from a day earlier, with the highest price at USD 18,950/mt and the lowest price at USD 18,450/mt. Daily trading volumes were 1,920 lots, down 758lots. Positions were 95,829 lots, up 764 lots. Inventories were 91,476 mt, up 456 mt.

LME nickel prices advanced last Friday. During the Asian trading hours, market sentiment was boosted following the news that China’s CPI fell from three-year high in July to 6.1% in September. During the European trading hours, the euro advanced and LME nickel prices rallied further due to optimistic expectation over G20 meeting. LME nickel prices closed at USD 18,925/mt, up USD 514/mt from a day earlier.

According to data released by China’s National Bureau of Statistics released on October 14th, China’s Consumer Price Index (CPI) in September was up 6.1%YoY, with growth slightly down from a month earlier, and the Producer Price Index (PPI) in September was up 6.5% YoY. Although China's YoY growth of CPI was only 0.1 percentage point from a month earlier, the slight decline of CPI has significant importance, which showed that China’s inflationary pressure eased to certain extent and tight monetary policy may ease to certain extent in certain areas.

In addition, G20 financial ministers suggested increasing IMF's financial scale to the euro zone. Meanwhile, China, Brazil and other emerging countries may provide assistance to euro zone through IMF. In this context, market sentiment improved to certain extent. Furthermore, retail sales data announced by the US was also strong, boosting equity markets in Europe and the US.

It is expected that optimistic market sentiment will boost LME nickel prices to certain extent from expectation that the European debt crisis will ease. However, any growth of LME nickel prices will be limited as specific measures have not released and European debt crisis has not improved substantially. SMM expects that LME nickel prices will move in the RMB 19,500-19,600/mt range on Monday. In domestic nickel spot market, last Friday’s LME nickel price rally will boost spot nickel prices to certain extent, and spot nickel prices will move between RMB 139,000-140,500/mt on Monday.

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