SMM Nickel Market Daily Review (2013-1-7)

SHANGHAI, Jan. 9 (SMM) – Jinchuan Group raised ex-works nickel prices by RMB 1,000/mt to RMB 121,000/mt on Monday. During the morning trading hours in the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were between RMB 121,500-121,800/mt, and mainstream traded prices of nickel from Russia were between RMB 120,500-120,800/mt. After Jinchuan Group hiked ex-works nickel prices, traders in the Shanghai nickel spot market also hiked offers of Jinchuan nickel prices to RMB 122,0000/mt and Russian nickel prices to RMB 120,800/mt. However, almost no transactions were reported after price hike. During the afternoon trading hours, spot prices fell along with LME nickel prices, but transactions were still quiet amid strong wait-and-see sentiment.

Based on SMM survey result on market sentiment, 40% market players believe that LME nickel prices will fluctuate in wide band in the coming week. They hold that market lack guidance after positive impact from the non-farm employment data and fiscal cliff negotiation waned, and LME nickel prices will fluctuate between USD 17,200-17,600/mt in the coming week.  Technical indicators do not suggest clear trend either. Indicators suggest that LME nickel prices meet resistance at USD 17,500/mt and may fall below USD 17,200/mt. However, if the US dollar fell after previous surge, LME nickel prices will struggle around 10-day, 20-day and 30-day moving average. With regard to supply, most nickel producers reported stable output in January. Although bad weather in Xinjiang will restrict local nickel output, and production resumption at Yuanjiang Nickel Industry will make overall supply stable. With regard to demand, downstream producers do not replenish stocks in a large amount, and transactions were still made among traders. It is expected that both supply and demand still not change, which fuels their expectation that LME nickel prices will remain stable in the coming week.

40% market players believe that LME nickel prices will fall below USD 17,000/mt to test support at 60-day moving average and may hit a low at USD 16,800/mt. They believe that although non-farm employment data did not fluctuate much, but US unemployment rate fell from 8.5% to 7.7%, which stoked speculation that the Fed will lessen efforts on QE. This boosted the US dollar and weighed on base metal prices.

20% market players were optimistic, believing that LME nickel prices will resume upward momentum and may break through USD 17,900/mt. They believe that bank will release the first round of loans. Meanwhile, China central bank injected RMB 90 billion liquidity into market through 5-day reverse repos, which will help ease cash flow pressure. Furthermore, a slow of economic reports will be released. It is reported that most report for November were better than market expectation, which will boost base meal prices.