SMM Weekly Forecast on China Nickel Metal Market-Shanghai Metals Market

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SMM Weekly Forecast on China Nickel Metal Market

SMM Insight 05:58:13PM May 21, 2012 Source:SMM

SHANGHAI, May 21 (SMM) --

Positive Factors:
1. LME nickel prices rallied to close at the 5-day moving average, finding support at the low end.
2. China’s Central Bank cut the deposit reserve ratio by 0.5%, effective May 18th, but the market response was modest although pessimistic sentiment at domestic enterprises should improve.
3. Nickel prices are expected to rise in the short term.
4. Growing LME nickel inventories weighed down prices, but nickel prices should improve since LME nickel inventories shrank early in the week.

Negative Factors:
1. Fitch announced a downgrade of Greece’s long-term credit default rating from "B-" to "CCC", and  a short-term credit rating downgrade from "B" to "C". Fitch said Greece will likely be forced out of the euro zone after its ratings were downgraded and since any new government will fail to implement austerity policies as required by the ECB. Moody’s also downgraded credit ratings of 16 Spanish banks, and is a sign that little improvement is expected in Spain’s current financial difficulties.
2. Italy’s government bond yields rose to 6.05%, and Spain’s 10-year government bond yields rose to 6.36%, with other European countries bond sales results also disappointing.
3. LME nickel prices should remain sluggish for the foreseeable future.

In this context, LME nickel prices should fall next week, but should remain steady for the short term. Prices will fall as USD 16,550/mt, however, if the European debt crisis shows no signs of progress.
 

Price

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#1 Refined Cu
Sep.20
47395.0
-65.0
(-0.14%)
Standard-Grade Copper
Sep.20
47380.0
-70.0
(-0.15%)
High-Grade Copper
Sep.20
47415.0
-55.0
(-0.12%)
Guixi copper
Sep.20
47425.0
-55.0
(-0.12%)
Low-quality copper
Sep.20
47330.0
-85.0
(-0.18%)

SMM Weekly Forecast on China Nickel Metal Market

SMM Insight 05:58:13PM May 21, 2012 Source:SMM

SHANGHAI, May 21 (SMM) --

Positive Factors:
1. LME nickel prices rallied to close at the 5-day moving average, finding support at the low end.
2. China’s Central Bank cut the deposit reserve ratio by 0.5%, effective May 18th, but the market response was modest although pessimistic sentiment at domestic enterprises should improve.
3. Nickel prices are expected to rise in the short term.
4. Growing LME nickel inventories weighed down prices, but nickel prices should improve since LME nickel inventories shrank early in the week.

Negative Factors:
1. Fitch announced a downgrade of Greece’s long-term credit default rating from "B-" to "CCC", and  a short-term credit rating downgrade from "B" to "C". Fitch said Greece will likely be forced out of the euro zone after its ratings were downgraded and since any new government will fail to implement austerity policies as required by the ECB. Moody’s also downgraded credit ratings of 16 Spanish banks, and is a sign that little improvement is expected in Spain’s current financial difficulties.
2. Italy’s government bond yields rose to 6.05%, and Spain’s 10-year government bond yields rose to 6.36%, with other European countries bond sales results also disappointing.
3. LME nickel prices should remain sluggish for the foreseeable future.

In this context, LME nickel prices should fall next week, but should remain steady for the short term. Prices will fall as USD 16,550/mt, however, if the European debt crisis shows no signs of progress.