SHANGHAI, May 2 (SMM)-LME nickel market overnight opened at USD 17,950/mt, with the highest and lowest level of USD 18,050/mt and USD 17,531/mt, respectively. Finally, LME nickel market closed at USD 17,760/mt, down USD 120/mt from a day earlier. Transactions for the day were 2,319 lots, down 239 lots. Positions were 106,760 lots, up 255 lots. Inventories were unchanged at 103,902 mt.
During the Chinese May Day holiday, LME nickel prices weakened, with a total loss of approximately USD 600/mt. Despite of positive US manufacturing data, signs indicate the US economic recovery was still soft. Coupled with significant increases in LME nickel inventories, LME nickel prices were weaker than other metals.
On May 1st, the China Federation of Logistics & Purchasing (CFLP) announced the April manufacturing PMI rose to 53.3. Meanwhile, the US April ISM manufacturing index was 54.8, better than market expectations, boosting market sentiment. The US GDP grew at a 2.2% annual rate during 1Q 2012, down from 3.0% in 4Q 2011. The higher-than expected decline triggered market speculations over the introduction of QE3. As a result, equities in the Europe and US gained, sending most metals up.
Continuous increases in LME nickel inventories indicate weak market demand, as evidenced by soft movements during the holiday period, despite of positive news from the US. SMM expects any rising room for LME nickel to be limited due to weak market fundamentals, with prices between USD 17,500-18,000/mt. In domestic spot nickel market, prices will drop significantly following marked declines in LME nickel market during the holiday period, with mainstream traded prices down to RMB 129,000-133,000/mt.