SMM Morning Review – 2011/11/23 Nickel Market

SHANGHAI, Nov. 23 (SMM) -- LME nickel prices opened at USD 17,766/mt and closed at USD 17,642/mt overnight, down USD 158/mt from a day earlier, with the highest price at USD 17,965/mt and the lowest price at USD 17,550/mt. Daily trading volumes were 1,803 lots, down 793 lots. Positions were 95,855 lots, up 433 lots. LME nickel inventories were 85,998 mt, up 2,058 mt from a day earlier.

The remarks from three credit rating agencies dispelled market concern that the US credit rating may be cut down. In addition, market concern eased to certain extent as Greek parties promised the European Union in a written form to continue deficit reduction policies. The lower-than-expected GDP data from the US and the US Federal Reserve meeting minutes would have limited impact on market. Moreover, some financing institutions in rural area in Zhejiang province were allowed to cut bank requirement reserve ratio by 50 basis points, which would boost China's stock market to certain extent.

LME nickel prices moved narrowly around USD 17,800/mt during the Asian trading hours, but swung wider to hit a high of USD 17,965/mt during the European trading hours. At the tail of the trading, LME nickel prices fell from high and closed at USD 17,642/mt, down USD 158/mt from a day earlier. LME base metal prices pared partial gains, as the lower-than-expected GDP from the US weighed on market sentiment. In addition, LME nickel inventories soared overnight, which also weighed on LME nickel prices to certain extent. 

Market players pin positive expectation of HSBC’s China PMI, which will boost market sentiment during the Asian trading hours. However, concern over the European debt crisis still haunts market. Therefore, SMM expects that LME nickel prices may initially advance but will fall back later, with support at USD 175,000/mt on Wednesday. In China’s spot nickel market, overnight LME nickel price decline will slightly weigh on spot nickel prices to move in the RMB 128,000-130,000/mt range on Wednesday.