SMM Morning Review - 2012/7/6 Nickel Market

SHANGHAI, Jul. 6 (SMM) – LME nickel prices overnight opened at USD 16,950/mt, with the high end USD 17,180/mt, finding support at USD 16,661/mt. Finally, LME nickel prices closed at USD 16,735/mt, down USD 250/mt. Trading volumes decreased by 1,404 lots to 3,430 lots, and total position was 107,719 lots, up 3,015 lots. LME nickel inventories were 103,578 mt, down 96 mt.

Transactions of LME nickel were sluggish due to the closure of US markets and the lack of significant economic data. Finally, LME nickel prices closed at USD 16,985/mt, down USD 235/mt.

European central bank lowered interest rates by 25 basis points, in line with market expectations, and China's central bank also lowered interest rates unexpectedly, causing LME nickel prices to fluctuate. As the market believed interest rate decreases mean recession, LME nickel prices closed at USD 16,735/mt, down USD 250/mt.

LME base metals prices fell slightly as the market was cautious due to unclear economic situation. But expectations that liquidity will improve grew as central banks took actions. China's central bank announced unexpectedly at 7:00 pm that it will lower one-year deposit interest rates by 0.25 percentage points, and one-year loans interest rates by 0.31 percentage points, effective July 6th, and European central bank also lowered interest rates by 25 basis points, to 0.75%. Earlier in the day, Bank of England announced it will maintain interest rates unchanged at 0.5%, and will increase 50 pound of quantitative easing. Metals will likely rebound in the short term.

LME nickel prices should move between USD 16,500-17,100/mt today, and domestic spot nickel prices should move between RMB 120,000-123,000/mt.