SMM Nickel Market Daily Review (2013-1-14)

SHANGHAI, Jan. 15(SMM) – During the morning trading hours in the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were between RMB 123,800-124,000/mt range, and mainstream traded prices of nickel from Russia were in the RMB 122,700-122,900/mt range. During the afternoon trading hours, traders rolled back goods by hiking offers when domestic stock market rallied. Therefore, offers of nickel from Jinchuan Group rose to RMB 124,000-124,200/mt, and nickel from Russia were between RMB 123,000-123,200/mt. However, downstream price acceptance was low, and transactions were quiet in the market.

According to SMM survey on market sentiment, 70% market players believe that LME nickel prices will advance to break through USD 17,600/mt and USD 17,900/mt in the following week. They believe that LME nickel prices will receive upward momentum from economic improvement in China. Not only domestic stock market rallied, economic data were also positive. It was reported last Thursday that China’s trade surplus hit USD 31.62 billion in December, better than USD 19.7 billion expected and USD 19.6 recorded last month. Meanwhile, China’s central bank continued to inject RMB 183 billion liquidity into market through reverse repos, which greatly boosted market confidence. Meanwhile, China will announce GDP for 4Q. As newly-released PMI and CPI both suggested economic recovery in China, market expectation towards GDP for 4Q was also positive, which will fuel optimistic sentiment in the market. Although technical indicators were stable, the daily K chart showed that LME nickel prices were poised to rise.

Furthermore, it was reported that a large amount of nickel was imported via Shanghai Customs, which was speculated by market players as purchases by State Reserve Bureau. This boosted transactions at ports, pushing up mainstream premiums at ports to USD 130-150/mt. Some overseas suppliers even quoted premiums as high as USD 150-200/mt. Therefore, large amounts of purchases from the State Reserve will boost nickel demand, which will improve transactions of nickel.

However, the remaining 30% market players believe that LME nickel prices will fall below to around USD 17,300/mt in the coming week. First, LME nickel inventories surged by 2,814 mt to 147,060/mt on Monday, which will weigh on nickel prices in the long term. In addition, Macquarie's latest report forecasts that nickel prices in 2013 will fall by 6.8%. Finally, downstream demand from buyers was not brisk, as players were not optimistic towards downstream demand.