SMM Morning Review – 2011/10/20 Nickel Market

SHANGHAI, Oct. 20 (SMM) -- LME nickel prices opened at USD 19,001/mt and closed at USD 18,647/mt overnight, down USD 613/mt from a day earlier, with the highest price at USD 19,149/mt and the lowest price at USD 18,600/mt. Daily trading volumes were 1,950 lots, down 204 lots. Positions were 91,950 lots, down 451 lots. Inventories were 89,478 mt, down 960 mt.

LME nickel prices were stable and largely fluctuated narrowly around USD 19,000/mt overnight. Investors’ concern over the European debt crisis still haunted market, and Moody’s downgraded Spain's credit rating by two notches. Coupled with uncertainties of EFSF expansion, investors' confidence was further eroded. At the tail of the trading, LME nickel prices closed at USD 18,647/mt, down USD 613/mt from a day earlier.

Moody’s cut credit rating of Spain and Federal Reserve’s Beige Book indicated that the US economic growth in September was slight, further dimming economic outlook in Europe and the US. Market sentiment was weighed, and LME base metal prices accelerated declines. In addition, Standard and Poor cut Slovenia’s credit rating from AA to AA-, with stable outlook. Market expectation over EU summit was pessimistic, believing that the summit would not come up with effective solution to European debt crisis. In addition, the constant stock market expansion in domestic market dragged Shanghai and Shenzhen stock markets and weighed down base metal market as well.

Concern over the European debt crisis still haunted market, and market players were waiting for outcome of EU summit. SMM expects that LME nickel prices will move around USD 19,000/mt on Thursday. In domestic spot nickel market, overnight LME nickel price decline will drag down spot nickel prices to certain extent, and SMM expects spot nickel prices will move in the RMB 13,000-139,000/mt range on Thursday.