SMM Morning Review – 2011/11/7 Nickel Market

SHANGHAI, Nov. 7 (SMM) -- LME nickel prices opened at USD 18,500/mt and closed at USD 18,877/mt overnight, up USD 452/mt from a day earlier, with the highest price at USD 18,925/mt and the lowest price at USD 18,500/mt. Daily trading volumes were 1,741 lots, down 696 lots. Positions were 98,623 lots, up 2,235 lots. LME nickel inventories were 85,476 mt, down 510 from a day earlier.

LME nickel prices rose rapidly to USD 18,800/mt during last Friday’s morning trading hours, but later met resistance to move in the USD 18,600-18,800/mt range. At the tail of the trading, LME nickel prices resumed upward momentum to stand above USD 18,800/mt, and closed at USD 18,877/mt, up USD 452/mt from a day earlier. Market is digesting last Friday’s US non-farm employment data, but is still weighed by concern over the euro zone economy.

The US non-farm employment data released on November 4th was lower than market expectation. However, as market players had certain preparation for possible weak non-farm employment data, market sentiment was not weighed significantly down by release of such data. However, concern over the European debt crisis still haunted market. In addition, the G20 summit ended Friday with little progress made on helping resolve the European sovereign debt crisis, with few countries committing euro zone rescue fund. These factors fueled market concern over economic recovery at various countries, and LME base metal prices ended mixed last Friday. The euro zone finance ministers’ meeting will be held in recent two days, which will discuss implementation details of previously-discussed relief measures. In China’s domestic market, positive policies will be gradually released. China’s stock market has advanced, indicating positive outlook for liquidity. The rally in China’s stock market will boost commodity market, which will support base metal market in return.

LME nickel prices closed with gains last Friday, but failed to break through USD 19,000/mt. It is expected that LME nickel prices will continue to fluctuate, with resistance at USD 19,000/mt, before outcome the euro zone finance ministers’ meeting. In China’s domestic nickel market, last Friday’s LME nickel price advance will boost spot nickel prices, and spot nickel prices will move in the RMB 137,500-140,000/mt range on Monday.