SMM Nickel Market Morning Review (2013-1-21)

SHANGHAI, Jan.21 (SMM) -- LME nickel for delivery in three months opened at USD 17,600/mt and closed at USD 17,500/mt last Friday, down USD 40/mt from a day earlier, with the highest price at USD 17,722/mt and the lowest price at USD 17,500/mt. Daily trading volumes were 2,888 lots, up by 585 lots. Positions were 108,926 lots, down by 793 lots. LME nickel inventories were 147,804 mt, up 576 mt from a day earlier.

Annualized growth of China’s GDP for 4Q was 7.9%, better than 7.8% expected and previous reading of 7.4%. In addition, China’s annualized retail sales and industrial output for December were both better than expectation. The economic data suggested that China’s economy began to rebound on 4Q, pushing Shanghai Composite Index up by 1% to 2300 points. In response, LME nickel prices advanced slightly. However, the University of Michigan consumer-sentiment index for January was lower than expectation, sending the US dollar above 80 and weighing down base metal prices to close at USD 17,560/mt, down USD 40/mt from a day earlier.

It was announced last Friday that the University of Michigan consumer-sentiment index for January was 71.3 points, lower than 75.0 points expected by economists and 72.9 points recorded a year earlier. However, the House of Representatives will vote next week to approve the Fed to raise debt ceiling for three months, which boosted market confidence.

Last Thursday’s better-than-expected GDP for Q4 failed to boost LME nickel prices. In addition, the mounting LME nickel inventories will continue to weigh on LME nickel prices. SMM expects that LME nickel prices will move between USD 17,400-17,800/mt, and Shanghai tin spot prices will move between RMB 122,500-124,000/mt on Monday.