SMM Morning Review – 2011/11/3 Nickel Market

SHANGHAI, Nov. 3 (SMM) -- LME nickel prices opened at USD 18,700/mt and closed at USD 18,480/mt overnight, down USD 120/mt from a day earlier, with the highest price at USD 19,080/mt and the lowest price at USD 18,350/mt. Daily trading volumes were 2,229 lots, down 683 lots. Positions were 95,649 lots, up 1,399 lots. LME nickel inventories were 86,538 mt, down 138 from a day earlier.

LME nickel prices initially rallied but later fell back overnight. During the Asian trading hours, LME nickel prices recovered partial of the ground lost on Tuesday due to profit-taking, and hit a high of USD 190,80/mt. However, during the European trading hours, LME nickel prices accelerated declines and closed at USD 18,480/mt, down USD 120/mt. The weaker US dollar and better-than-expected employment data limitedly boosted LME nickel prices.

LME base metal prices rebounded on Wednesday after declining for three consecutive days, as market concern over the European debt crisis eased to certain extent following Federal Reserve's statement that the Fed will provide help when necessary. Rebound of equity markets in the US and Europe also boosted base metal prices, with the Dow Jones Industrial Average up 178.08 points. The European equity market closed with gains on Wednesday after declining for three consecutive days. In domestic market, market sentiment was also boosted by improved liquidity from policy fine tune and successful launch of Shenzhou eighth airship. Close attention should be paid to G20 summit scheduled on Thursday and Friday.

LME nickel prices are relatively weak recently, but are expected to rebound slightly on Thursday, with support at USD 18,000/mt and resistance between USD 19,000-19,200/mt. Close attention should be paid to G20 summit and China’s stock market movement. In China’s spot nickel market, overnight LME nickel price decline may drag down spot nickel prices, and SMM expects that spot nickel prices will move in the RMB 136,000-138,000/mt on Thursday.