SHANGHAI, Jul. 17 (SMM)—LME nickel market overnight opened at USD 16,155/mt, with the highest and lowest level of USD 16,230/mt and USD 16,101/mt, respectively. Finally, LME nickel market closed at USD 16,176/mt, down USD 24/mt from a day earlier. Transactions for the day were 1,717 lots, down 1,240 lots. Positions were 111,174 lots, down 1,329 lots. Inventories were 107,130 mt, up 1,368 mt.
No major news was released a day ago, but market risk aversion sentiment was strong due to sharp declines in Asian stocks markets. The euro against the dollar approached to a low seen last Friday, weighing down LME nickel prices. At the tail of trading, LME nickel market pared early losses, as the US weak retail sales raised market expectations over the QE3. Finally, LME nickel prices finished at USD 16,176/mt, up USD 24/mt from a day earlier.
LME base metals market overnight increased across the board except for copper which edged down. The US retail sales for June were reported down from a month ago, worse than expectations and slipping for the third consecutive month which was last seen in 2008, implying US economic recovery is losing momentum. The decline added to investors’ bet on implementation of QE3, driving down the US dollar index. In China, market also expects the central government will introduce more stimulus measures. At present, base metals have found certain support at lower level, should risk appetite keep raising, metal prices will likely test the 30-day moving average. However, as the Chairman of the Fed Bernanke will give testimony tonight, the upward room should be limited.
The Moody’s action to downgrade a bunch of Italian banks is expected to weigh down the market. Meanwhile, an additional downward pressure will be available if stocks prices in China continue to drop. During the European trading hours, market attention will be on the US Federal Reserve Chairman’s testimony to the Congress. If any stimulus measures are released, market pressures will be eased. The possibility of the QE3 will be low as the country just extended the Operation Twist program. On Tuesday, LME nickel prices are expected to move between USD 15,900-17,400/mt, and domestic spot nickel prices will range from RMB 117,000-126,500/mt.