SHANGHAI, Jan. 16 (SMM) – LME nickel price overnight opened at USD 17,340/mt, with the high end of the price range USD 17,575/mt, and finding support at USD 17,150/mt. Finally, LME nickel prices closed at USD 17,510/mt, up USD 175/mt. Trading volumes increased by 1,013 lots, to 3,737 lots, and total position decreased by 722 lots, to 112,397 lots. Inventories grew by 50 mt, to 147,060 mt.

There was limited news in Asian market, and Asian stocks markets were mixed, without any directions for metals market. In this context, LME nickel prices fluctuated narrowly during Asian trading, vacillating around USD 17,300/mt in the afternoon. As US December retail sales index was better than both previous data and forecasts, LME nickel prices climbed slightly and finally closed at USD 17,510/mt, up USD 175/mt.

US December retail sales were up 0.5% MoM, better than the forecast, and reflecting strong consumer spending at the end of 2012. The growth of seasonally adjusted commercial inventories in November was 0.3%, with USD 1.62 trillion, and in line with expectations. US December PPI was down 0.2% MoM, larger than the forecast of 0.1%, showing low inflationary pressure and the US Federal Reserve still has room to push additional easing policies. Besides, January manufacturing index of New York Federal Reserve was -7.78, much lower than the expected 0.00. The manufacturing has been contracting for a sixth straight month due to the sharp slide of new orders and shipping index.

Statistisches Bundesamt shows Germany's economy in 4Q shrank 0.5% on a quarterly basis, the sharpest decline since the financial crisis. Impacted by European debt crisis, Germany is likely to go into recession. Germany's GDP was up 0.7% YoY in 2012, compared to the forecast of a 0.8% increase.

The World Bank lowered expectation for global economic growth in 2013 to 2.4%, compared to the previous 3%. The famous rating agency Fitch said ratings of US, UK, France and Spain will likely be downgraded. If the medium-term plan for spending cuts in the US lacks reliability, its rating will be lowered.

China's newly increased funds outstanding for foreign exchange in December totaled RMB 134.6 billion, with fiscal deposit decreased by RMB 1.1927 trillion. China's central bank implemented 14-day reverse repurchasing totaling RMB 10 billion on January 15 by interest rates bidding to further release liquidity.

LME nickel prices will lack momentum to rise, and fluctuate between USD 17,300-17,800/mt today. If any positive data was released from China, prices are expected to soar, with spot prices between RMB 121,500-123,500/mt.