SMM Nickel Market Morning Review (2012-10-19)

SHANGHAI, Oct. 19 (SMM) -- LME nickel LME nickel for delivery in three months opened at USD 17,179/mt and settled at USD 17,153/mt overnight, up USD 191/mt from a day earlier, with the intraday high at USD 17,350 mt and the low at USD 17,153/mt. Daily trading volumes were 2,716 lots, down 157 lots. Positions were 113,720 lots, down 157 lots. LME nickel inventories were 127,152 mt, down 804 mt.

Asian stock market extended gains on Thursday, with Shanghai Composite Index and Nikkei Index both advancing. China's GDP growth for Q3 was 7.4%, the lowest in three years, but the retail sales and industrial output were higher than previous reading. Meanwhile, China’s Premier Wen Jiabao expressed positive expectation over China’s economic outlook, fueling market expectation that China's economy already hit bottom. In this context, LME nickel prices received certain support to advance. During the European and US trading hours, the US initial jobless claim unexpectedly grew, weighing on LME nickel prices. Later, Google announced lower-than-expected earnings report, with the company stock falling by 11%, which dragged down tech shares. In response, LME nickel prices slipped. Finally, LME nickel settled at USD 17,311/mt, up USD 191/mt from a day earlier.

LME base metal prices largely advance during Asian trading hours, pared gains during the European and the US trading hours. The EU summit still has many uncertainties, but some progresses have reported as well. It was reported that there would be and agreement on a political framework for the end of 2012 and a gradual implementation in 2013 for the new EU single supervisory mechanism (SSM) for banks, and Germany agreed that all 6,000 banks in the 17-nation euro zone will be regulate by the ECB and daily fairs shall be regulated by their own county’s regulation institutions. Meanwhile, banking recapitalization would be carried out in 2013. However, the US economic data failed market expectation, weighing on base metal prices. According to data from the US Department of Labor, last week’s initial jobless claim grew to 46,000, far higher than 30,000 expected, dampening positive sentiment in the market.

The US dollar is poised to rise after hitting 79, which will exert downward pressure on LME nickel prices. SMM expects LME nickel prices will move in the USD 17,100-17,600/mt range, and spot nickel will hold between RMB 124,800-127,500/mt on Friday.