SHANGHAI, Nov. 2 (SMM) -- LME nickel prices opened at USD 19,690/mt and closed at USD 18,600/mt overnight, down USD 1,050/mt from a day earlier, with the highest price at USD 19,700/mt and the lowest price at USD 18,550/mt. Daily trading volumes were 2,912 lots, up 1,424 lots. Positions were 94,250 lots, down 1,247 lots. LME nickel inventories were 86,676 mt, up 168 from a day earlier.

LME nickel prices largely fluctuated narrowly around USD 19,500/mt during Tuesday’s Asian trading hours, but slipped lower as risk aversion sentiment weighed down commodity, stock and euro on the news that Greek would hold a public referendum on the proposed bailout. In addition, economic data from China and the US were both lower than market expectation, further dampening investors’ confidence. LME nickel prices accelerated declines and closed at USD 18,600/mt, down USD 1,050/mt or down 5.3% from a day earlier. 

Greek Prime Minister George Papandreou announced that he would leave the fate of the bailout to voters in his country. Investors fretted that the measure would put Greece's EU membership at risk and worsen the current euro zone crisis. Fitch’s said that if Greek referendum vetoes bailout plan, a forced and disorderly sovereign default of Greece may increase and Greece may exit from the euro. Equity and commodity accelerated declines in European and the US market overnight. Adding to pressure, investors were worried whether or not recent equity and commodity markets can sustain growth amid the abrupt bankruptcy of securities firm MF Global and lower-than-expected manufacture data from China.

Concern over the European debt crisis grew, and economic conditions were still sluggish in China and the US. SMM expects that LME nickel prices will still fluctuate at low level, and may slip further on Wednesday, with support at USD 18,000/mt. In China’s domestic nickel spot market, overnight LME nickel price slump will definitely weigh on spot nickel prices, and SMM expects spot nickel prices will move in the RMB 137,000-139,000/mt range on Wednesday. Close attention should be paid to price adjustment from Jinchuan Group.