Metals News
SMM Daily Review - 2012/7/9 Nickel Market
price review forecast

Shanghai, Jul. 10 (SMM) – On Monday, Jinchuan Group cut ex-works prices for refined nickel to RMB 121,000/mt (large panel), and RMB 122,200/mt (small in barrel), down RMB 3,000/mt.  In the Shanghai spot nickel market, mainstream traded prices for Jinchuan nickel were RMB 121,300-121,500/mt, and RMB 119,000-119,200/mt for Russian nickel. Price cuts by Jinchuan Group generated little market response, with no significant changes in mainstream traded prices. Only a limited number of Russian nickel was at RMB 118,900/mt, leaving no impact on the market. Downstream producers took a strong wait-and-see stance on Monday, with quiet trading.  Some traders increased sales when prices were high, and so inventories were down, resulting in stocks replenishment. Market transactions were mainly done by those traders.

According to a recent SMM survey of price movements this week, 60% market players expect nickel prices to drop, and may slid below USD 15,980/mt. First, positive news from the EU summit last Friday has been absorbed. Last Friday, the yield of Spanish 10-year bonds rose to 7%.  Second, the US economy is on the way of mild recovery, and the US Federal Reserve is not expected to introduce the QE3 in the short run. Third, international crude oil and commodity prices tumbled, but inflation pressures remained unrelieved, further reducing the possibility of the QE3.

The remaining 40%, however, believe nickel prices will fluctuate this week. The euro/dollar fell below 1.2285 last Friday, a fresh low in two years. The gloomy economy triggered a strong risk aversion sentiment. The GDP and other economic data in China and the results of US Federal Reserve meeting will be released in late this week. Hence, market worries over the economic growth will not help market turn around before the release of any position news. In addition, LME nickel prices have slid to the lowest level since June 2009, and costs and profit-taking by shorts may support nickel prices. Hence, these market players believe that nickel prices will remain weak, but any falling room will be limited.


the Shanghai nickel market
LME nickel prices
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