SHANGHAI, Jun. 11 (SMM) --
Positive Factors:
1. Spanish 10-year government bond yields rose by 2 basis points on Thursday, to 6.27%, but were down from the 6.7% yield the previous week. Germany and France have agreed to provide capital to solve Spain's debt problems.
2. After the Shanghai Composite Index fell below 2,300, China's central bank announced it would lower interest rates for one-year term deposits and loans by 0.25%, effective June 8th, boosting sentiment in China's domestic real estate sector and hopes that downstream demand will now improve.
3. LME nickel prices found strong support at USD 16,000/mt and will unlikely fall below that level without any significant negative news. LME nickel prices should find support at the 5-day moving average.
4. US steel makers cut the current 33% of fuel surcharge for stainless steel plate. Sluggish stainless steel markets in the US have weighed down LME nickel prices, and the lower fuel surcharge is expected to boost US stainless steel markets.
Negative Factors:
1. Greece's general election will take place next weekend, but may only exacerbate Greece's debt problems. If Greece exits the euro zone, the entire global economy will be affected. Risk aversion sentiment will cause capital to flow into US dollars, pushing down LME nickel prices.
2. Despite poor US economic data, the US Federal Reserve did not mention any possibility of implementing QE3 policies. In this context, the US dollar index will not fall in the short term and will continue to weigh down LME nickel prices.
3. The Shanghai Composite Index fell below 2,300. Disappointing domestic economic data and recent cuts in interest rates signal that May economic data will also be negative.
In general, the easing of tight economic policies by governments to boost sluggish economies was positive news for markets. Although governments lowered interest rates, weak economies will not recover in the short term and LME nickel prices will not likely rebound in the coming week. Greece will continue to be the focus of markets and will affect market sentiment.
China's Domestic Spot Markets
Russian nickel supply did not increase, so prices will remain weak. Transactions are expected to remain lackluster in the coming week.
