SHANGHAI, Jul. 2 (SMM) –
1. The German finance minister admitted Germany and other nations will have to take short-term action to prevent capital from flowing out of the euro zone, including the purchase of government debt by EFSF or ESM. He also said the nations will share debt in some form once the direction of common financial policies for Europe is decided. If the EU summit results in a clear plan of action, the value of risky assets, including LME nickel, should find more support.
2. The EU, IMF, and ECB will meet in Cyprus next Monday. The IMF representative said he will also travel to Greece in order to discuss adjustments in bailout clauses. As a result, market confidence may improve.
1. The EU summit only reached an agreement on the stimulus plan, but attitudes toward the issue of joint-euro zone government bonds are mixed.
2. Positions of LME nickel contracts continued to increase, while trading volumes contracted. Any positive news from the EU summit will boost LME nickel prices.
In general, there may be some positive news from the EU summit, which will briefly boost market sentiment, but will not change current conditions in the euro zone. In this context, LME nickel prices will not rebound in the foreseeable future.