SMM Daily Review - 2012/5/14 Nickel Market

Shanghai, May 15 (SMM) – In the Shanghai nickel market, spot prices staged sharp losses along with tumbling LME nickel prices on Monday. Mainstream traded prices for Jinchuan nickel slid to RMB 129,000-129,200/mt, and RMB 126,800-127,000/mt for Russian nickel. Market pessimism allowed downstream producers to stay away from the market, and traders were also wary of purchases. Hence, market trading was light.

According to a recent SMM survey of price movements this week, 60% market players expect nickel prices to drop.This week, the debt-ridden countries in the euro zone will face the first round of bonds auctions after elections in France, Greece and some cities in Italy. The election results show that parties who favored austerity measures in the election all failed to win the election. Markets are now concerned over the results of bonds auction sales. Nickel and other metals will come under great downward pressures if more negative news comes from the Europe. Besides, the failure to create a coalition government in Greece has added to the possibility that Greece may exit from the euro zone. In this context, the dollar will remain strong, and so base metals and other commodities will face heavy downward pressures, and may hit a new low for the year.

30% market participants expect LME nickel prices to keep fluctuating this week. Those people believe that sluggish nickel prices are due largely to weak demand in China. The cut of reserve requirement ratio by China’s central bank is expected to help domestic economy to rebound, supporting market sentiment. As LME nickel prices have dropped to a low level, any downward room will be limited. Hence, LME nickel prices should continue to fluctuate this week.

The rest 10% players understand that LME nickel prices will rebound this week, along with the absorption of negative news and support from low buying activities.