SMM Morning Review – 2011/11/28 Nickel Market

SHANGHAI, Nov. 28 (SMM) -- LME nickel prices opened at USD 17,075/mt and closed at USD 16,938/mt last Friday, down USD 137/mt from a day earlier, with the highest price at USD 17,189/mt and the lowest price at USD 16,825/mt. Daily trading volumes were 1,995 lots, up 901 lots. Positions were 99,412 lots, up 3,137 lots. LME nickel inventories were 88,668 mt, up 192 mt from a day earlier.

Last Fridays’ meeting participated by finance ministers from Germany, the Netherlands and Finland did not come up with any constructive suggestions. The Finland’s finance minister was opposed to issue eurozone bonds, weighing market sentiment in the short term and dragging down non-US dollar currencies. Due to increasingly growing concern that the European debt crisis may curb global economic growth and dampen demand for commodities in the future, investors' bullish expectation of base metal prices was significantly reduced. LME base metal prices largely presented weak performance last Friday. In addition, the remarks from Chinese government that they will continue regulation on real estate industry fueled short sentiment in the market.

After advancing slightly during the Asian trading hours, LME nickel prices fell to hit a low of USD 16,825/mt during the early European trading hours. At the evening trading hours, LME nickel prices rebounded to hit a high of USD 17,175/mt, but fell to close at USD 16,938/mt, down USD 137/mt from a day earlier.

LME nickel prices fell below support level of USD 17,000/mt last Friday, suggesting growing downward risks. In addition, the US dollar surged, as the exacerbated European debt crisis fueled risk aversion sentiment. SMM expects that LME nickel prices will continue to fluctuate narrowly around USD 17,000/mt on Monday, with support at USD 16,800/mt. In China’s domestic nickel spot market, last Friday’s LME nickel price decline will drag down spot nickel prices to move in the RMB 125,000-127,500/mt on Monday.