SMM Morning Review - 2012/6/15 Nickel Market

SHANGHAI, Jun. 15 (SMM) – LME nickel prices overnight opened at USD 17,030/mt, with the high end USD 17,125/mt, finding support at USD 16,640/mt. Finally, LME nickel prices closed at USD 16,740/mt, down USD 286/mt. Trading volumes increased by 564 lots to 2,733 lots, and total position was 116,577 lots, up 196 lots. LME nickel inventories were 103,932 mt, down 66 mt.

LME nickel prices edged up but fell in the afternoon due to concerns over Italian government bond sales. With lower-than-expected US major economic data and since Italian government bond yields continued to rise, LME nickel prices fell further and closed at USD 16,740/mt, down USD 286/mt.

LME base metals prices overnight continued to fluctuate around the 5-day moving average, and rose slightly as shorts entered the market, with cautious sentiment dominating the market. As Greece's left wing party is willing to negotiate with EU, expectations that Greece will not exit euro zone even if the left wing party wins the general election. Besides, the poor US major economic data pushed down the US dollar index. US retail sales in May were down 0.2% from the previous month, and the PPI dropped 1.0%. The market was depressed due to disappointing economic data, which will allow the US Federal Reserve to take stimulus policies at the monetary policy conference next Monday.

LME nickel prices will not fluctuate significantly during Asian trading hours prior to Greece's general election. Greece's left wing party claimed Thursday it will lift the rigor clauses imposed on the bailout plan, but will retain Greece in the euro zone. Besides, major global central banks will take joint measures post Greece's general election to inject liquidity to the country, which will lead to significantly fluctuation in the market. In this context, large numbers of buyers will entered the market, pushing up LME nickel prices. 

In this context, LME nickel prices should move between USD 16,400-17,200/mt today, and domestic spot nickel prices should move between RMB 121,000-124,000/mt.