SMM Morning Review - 2011/12/20 Nickel Market

SHANGHAI, Jun. 20 (SMM) -- LME nickel for delivery in three months opened at USD 18,510/mt and closed at USD 18,412/mt, down by USD 98/mt from a day earlier, with the highest price at USD 18,580/mt and the lowest price at USD 18,050/mt. Daily trading volumes were 2,240 lots, down 779 lots. Positions were 119,435 lots, up by 1,164 lots from a day earlier. LME nickel inventories were down by 372 mt to 88,338 mt.

The death of North Korean leader Kim Jong-il adds another layer of global uncertainty, triggering risk aversion buying of gold and weighing on metal prices. However, impact from the Kim Jong-il death has not exerted long-lasting impact on market. At the EU financial ministers’ meeting on December 19th, consensus was reached that Sweden, Denmark, Poland and Chech would provide IMF with EUR 150 billion loans. According to data announced by China’s central bank on December 19th, China’s foreign exchange reserves for November continued to slip, stoking expectation that China’s central bank may further cut down bank’s requirement reserve ratio.

LME nickel prices were weighed down to hit a low of USD 18,050/mt on the news of death of North Korea  leader Kim Jong-il, but later pared losses to rebound above USD 18,400/mt. During the European trading hours, LME nickel prices fluctuated in a narrow band between USD 18,400-18,500/mt, and closed at USD 18,412/mt, down USD 98/mt from a day earlier. 

It is expected that LME nickel prices will continue fluctuation trend due to absence of solid news on Tuesday, with resistance at USD 18,600/mt and support at USD 18,000/mt. In China’s nickel spot market, overnight LME nickel price decline will drag down spot nickel prices to certain extent. SMM expects that spot nickel prices will move in the RMB 125,500-128,000/mt range on Tuesday.