SHANGHAI, Jun. 5 (SMM)-LME nickel market last Friday opened at USD 16,385/mt, with the highest and lowest level of USD 16,400/mt and USD 16,020/mt, respectively. Finally, LME nickel market closed at USD 16,075/mt, down USD 283/mt from a day earlier. LME market was closed on Monday due to the Spring Bank holiday.
On Monday, Jinchuan Group cut ex-works prices for refined nickel to RMB 122,000/mt (large panel), and RMB 123,200/mt (small in barrel), down RMB 4,000/mt. In the Shanghai nickel market, mainstream quotations of Jinchuan nickel before price cuts were between RMB 122,000/mt, and RMB 119,500-120,000/mt for Russian nickel. After price cuts, mainstream traded prices for Jinchuan nickel were down to RMB 121,800-122,200/mt, and Russian nickel down to RMB 119,000-119,500/mt. Due to the lack of market direction, downstream producers were wary of purchases, leading to quiet trading.
According to the latest SMM survey, approximately 60% market players expect nickel prices to drop further this week. The PMI for May in China, Germany, and euro zone was all below market expectations, and meanwhile the April employment data in the euro zone was also disappointing. Moreover, the US non-farm payrolls added by 69,000 in May, far below market estimations of 150,000, and the unemployment rate rose from 8.1% to 8.2%. All these weighed down nickel and other metals prices. In marked contrast, gold prices soared by 4%, highlighting the strong market risk aversion sentiment. In addition, higher LME nickel inventories, unfavorable technical trends, as well as the sluggish stainless steel markets all have added to market pessimism.
The rest 40% believe nickel prices will stop falling this week. Some market players believe that the European Central Bank (ECB) may cut interest rate during the meeting this Wednesday. If ECB takes no action, investors will shift the focus into latest forecast on economy and inflation. This Thursday, the US Federal Reserve Chairman may be asked about whether or not twisted operations will be extended or QE3 in his testimony. These market players believe that price movements this week will be dominated by the news from the ECB and US Federal Reserve. Nickel prices should stabilize before these events.