SHANGHAI, Oct. 16 (SMM) -- Last Friday’s LME nickel price tumble weighed on Shanghai spot nickel prices this Monday. During Monday morning trading hours, mainstream traded prices of nickel from Jinchuan Group were between RMB 126,200-126,400/mt and mainstream traded prices of nickel from Russia were between RMB 124,400-124,600/mt. During the afternoon trading hours, as LME nickel prices fell further, mainstream traded prices of nickel from Jinchuan Group fell to around USD 126,000/mt and mainstream traded prices of nickel from Russia were around RMB 124,200/mt.However, Jinchuan Group did not cut ex-works nickel prices, resulted in cautious transactions in the market.
Based on result of an SMM survey on market sentiment, 60% market players believe that LME nickel prices will stabilize in the RMB 17,000-17,500/mt range in the coming week, and their reasons are as follows. First, LME nickel prices will experience correction after sharp decline from USD 18,920/mt to USD 17,000/mt, down 10%. In addition, stainless steel inventories in Wuxi were 176,620 mt, down 5.91% MoM. Inventories of #300, #400 and cold-rolled stainless steel all fell. Inventories of #300 stainless steel, the largest downstream product, were 126,140 mt, down 5.79% MoM, and inventories of #400 stainless steel were down 11.56% MoM. The decline in inventories suggested improvement in downstream consumption, which will lend support for LME nickel prices. Further, a slew of economic data announced from China were better than market expectation. China’s exports for September were up 9.9% YoY, far higher than 5.0% expected, and China’s export value for September hit a record high at USD 186.4 billion. China’s imports also vaulted market expectation. China's M2 for September was up 14.8% YoY, higher than previous 13.5%, suggesting acceleration of China’s loose monetary policy. China’s CPI for September fell from 2.0% to 1.9%, and PPI for September fell from 3.5% to -3.6%.
The remaining 40% market players believe that LME nickel prices will fall to around USD 16,500/mt. Recently, Spain and Greece reported slow progress in their debt issue, and the EU summit scheduled this Thursday is unlikely to come with significant progress. The persistent European debt crisis will continue to weigh on base metal prices. In addition, the US dollar is above 80, and may advance above 30-day moving average, which will weigh on LME base metal prices. Furthermore, technically speaking, LME nickel prices were between 30-day and 60-day moving average and showed a downward track.