SMM Morning Review – 2011/12/1 Nickel Market

SHANGHAI, Dec.1 (SMM) -- LME nickel prices opened at USD 17,150/mt and closed at USD 17,407/mt overnight, up USD 307/mt from a day earlier, with the highest price at USD 18,100/mt and the lowest price at USD 16,550/mt. Daily trading volumes were 5,200 lots, up 2,958 lots. Positions were 101,736 lots, up 1,254 lots. LME nickel inventories were 90,930 mt, up 612 mt from a day earlier.

China’s central bank announced on November 30th to raise bank requirement reserve ratio (RRR) by 0.5 percentage points, effective as of December 5th, the first time of RRR cut in two years, boosting market sentiment. In addition, the US Federal Reserve, the European Central Bank, the Bank of Canada, the Bank of England, the Bank of Japan, and the Swiss National Bank decided jointly take action to "enhance their capacity to provide liquidity support to the global financial system." In addition, the ADP employment data for November from the US was better than market expectation, injecting a dose of confine to player. Boosted by positive news, the US and European equity market rallied, and LME base metal prices soared in response. It is expected that Shanghai base metal prices will surge on Thursday.

Market sentiment will be boosted by overnight’s positive news, but will remain cautious before release of non-farm employment data from the US and the next week’s EU summit. It is expected that LME nickel prices will continue to be weighed and will continue fluctuation trend on Thursday, with support at USD 17,000/mt. In China’s domestic nickel spot market, overnight LME nickel price decline will drag down spot nickel prices to move in the RMB 125,500-127,000/mt range on Thursday.