SMM Daily Review - 2012/1/9 Nickel Market

SHANGHAI, Jan. 10 (SMM) -- During Monday’s Asian trading hours, LME nickel for delivery in three months slipped after opening, but later advanced to certain extent on rebound in China’s equity market. During the European trading hours, LME nickel prices pared early losses, and hit USD 18,745/mt at 18:00. LME nickel prices were firm above 10-day moving average of USD 18,500/mt, and will try to test resistance of 5-day moving average at USD 18,800/mt. Close attention should be paid to  meeting between Germany and France as well as industrial output data from Germany.

In the Shanghai nickel spot market, offers were mixed during the morning trading hours. Mainstream offers of nickel from Jinchuan Group were between RMB 131,500-132,000/mt, and mainstream offers of nickel from Russia were between RMB 129,500-130,000/mt. Boosted by pre-holiday stock replenishment, mainstream traded prices advanced to certain extent during the afternoon trading hours. Mainstream traded prices of nickel from Jinchuan Group were between RMB 131,800-132,000/mt, and mainstream traded prices of nickel from Russia were between RMB 129,800-130,000/mt. Spot transactions were relatively brisk on Monday. According to market players, supply of imported nickel from Russia was limited, so demand for Russian nickel was better than Jinchuan nickel.

Based on result of an SMM survey on market sentiment, 50% market players believe that although current LME nickel prices are weak, the meeting between Germany and France is expected to come with positive result to boost LME nickel prices. Coupled with pre-holiday downstream stock replenishment, spot nickel prices are also expected to advance further.
40% market players hold that LME nickel prices will remain flat from a week earlier. The US dollar will remain strong, and the euro will be still sluggish, which will restrict LME nickel prices from rising further. However, downstream pre-holiday stock replenishment will support spot nickel prices to certain extent. In this context, nickel prices will continue to vacillate in this coming week. 

10% market players expect that LME nickel prices will continue to be weighed by the European concern. Hungary’s credit cut will cloud the European market, and the steady decline in the euro will continue to cap LME nickel price growth. In addition, with the approaching of China' New Year holiday, supply and demand will be both sluggish in spot nickel market, so nickel prices face more downward risks.