SMM Daily Review - 2012/6/11 Nickel Market

SHANGHAI, Jun. 12 (SMM) -- On Monday, Jinchuan Group raised nickel prices to RMB 124,000/mt, up RMB 200/mt. Mainstream prices of Jinchuan nickel were between RMB 123,000-123,500/mt, while mainstream Russian nickel prices were between RMB 120,500-121,000/mt. Downstream buying interest remained low despite spot prices were lowered, with transactions still muted. Mainstream prices of Jinchuan nickel rose to RMB 124,000-124,500/mt after Jinchuan Group adjusted prices, while Russian nickel prices also rose to RMB 121,000-121,500/mt, but transactions were quiet.

According to an SMM survey, 40% of market players believe nickel prices should continue to rebound, touching USD 17,000/mt level. As China's May CPI fell to 3%, monetary policies should be loosened, so they believe the industry will improve as downstream consumption turns around.

30% are pessimistic due to the European debt crisis. Italy now has EUR 2 trillion of debt, with the proportion in its gross economy only smaller than Greece and Japan. Its finance ministry issues EUR 35 billion of government bonds every month, which is higher than annual gross economy in Cyprus, Esthonia and Malta. Italian 10-year government bond yields are also pessimistic, turmoil in euro zone will remain if Italy's problem exacerbates.

The remaining 30% believe nickel prices will remain fluctuating prior to Greece's general election, and the result of the general election will affect European problems. The market should remain cautious.