SMM Nickel Market Morning Review (2012-10-29)

SHANGHAI, Oct. 29 (SMM) -- LME nickel for delivery in three months opened at USD 16,200/mt and closed at USD 16,050/mt, down USD 133/mt from a day earlier, with the intraday high at USD 16,275/mt and the low at USD 15,905/mt, down USD 133/mt from a day earlier. Daily trading volumes were 3,851 lots, up 912 lots. Positions were 112,435 lots, down 336 lots. LME nickel inventories were 129,012 mt, up 294 mt.

LME base metal prices fell sharply last Friday. During the late trading hours, the US GDP for Q3 was announced at 2%, better than 1.3% expected and previous reading at 1.9%。In addition, consumer expending for Q3 was up 2%. Following the release of these positive economic data, LME nickel prices advanced to pare most early losses. However, LME nickel prices still closed USD 133/mt lower at USD 16,050/mt as US dollar index stood above 8.0.

LME base metal prices were largely on downward track last Friday, as market concerned that Greece may fail to materialize financial cut plan. Meanwhile, Greek political uncertainties dampened investors’ confidence. Further, weak economic data from the euro zone and Spanish’s uncertain over financial aid exacerbated market concern. Last Friday, the US announced better-than-expected GDP growth for Q2 at 2.0%. Meanwhile, consumer spending and housing expenditure growth also supported base metal prices.

The announcement of US consumer price index for September and Germany's consumer price index will affect base metal price movement. Overall trading sentiment was still not optimistic, but dip-buying may prevent nickel prices from slipping further. SMM expects that LME nickel prices will move in the USD 15,900-16,300/mt range and spot nickel prices will fluctuate between RMB 116,000-118,000/mt on Monday.