SHANGHAI, Oct. 23 (SMM) -- In China’s nickel spot market, Jinchuan Group cut ex-works nickel prices by RMB 3,000/mt to RMB 123,000/mt on Monday. In response, mainstream traded prices of nickel from Jinchuan Group slipped to RMB 123,200-123,500/mt, while mainstream traded prices of nickel from Russia fell to RMB 122,100-122,400/mt. Wait-and-see sentiment further grew amid LME nickel price decline. Most traders adopted a wait-and-see sentiment, and transactions were extremely quiet.
Based on result of an SMM survey on market sentiment, 50% market players believe that LME nickel prices will stabilize in the RMB 16,700-17,200/mt range in the coming week. Market focus will shift to the US Fed interest rate meeting result. Although market expects that interest rate will remain unchanged, the meeting will signal the Fed’s attitude towards QE3, which will affect base metal price movement. In addition, the US GDP data for Q3 will also affect market movement. It is expected that GDP for Q3 will be better than a quarter earlier. If the projection is true, QE3 will be restricted. Players believe that LME nickel prices will remain stable amid cautious sentiment before GDP and interest rate result from the US.
30% market players are pessimistic and believe that LME nickel prices will fall below USD 16,500/mt and will finally close at USD 16,000-16,500/mt in the coming week. Spanish’s Asturias province and Balearic Islands asked for financial help from central government, bringing total number of regions requesting financial aid to 8 in Spain. However, during the latest EU summit, Span did not message any financial aid request, which hints possibility that the European debt crisis may continue to drag down LME nickel prices. In addition, the US equity market dived to record a four-month low last Friday due to poor earnings reports from Microsoft, Mcdonald's, and General Electronics. The US tech sector will continue to announce earnings reports from other listed company. If the earnings reports remain weak, the US equity may fall further, which will in turn weigh on LME nickel prices.
The remaining 20% market players believe that LME nickel prices will rise above USD 17,500/mt in the following week, with reasons below. First, technically speaking, LME nickel prices will receive strong support at USD 16,600/mt, and shorts will exit market after profit-taking and longs will enter market once LME nickel prices fall below this level, which will in turn push up LME nickel prices higher. According to data from China, foreign assets have flowed back to China amid RMB appreciation, suggesting that China’s economy has already hit bottom. If China’s economy begins to stabilize, base metal prices will bottom out.