SMM Nickel Price Forecast (Jan. 21-25)

SHANGHAI, Jan. 21 (SMM) –

LME Nickel Price Trends

Positive Factors:

1. Annualized growth of China’s 4Q GDP was 7.9%, slightly better than the forecasted 7.8% and up from 3Q’s 7.4%. In addition, China’s annualized retail sales and industrial output for December were both better than expectations. 

2. New housing starts in the US during December rose by 12.1% compared to November, the largest gain since July 2008. In addition, initial jobless claims were only 335,000, better than the 369,000 expected and down from the previous reading of 372,000, and the largest decline in four years. 

3. 4Q earnings reports from Citigroup, JPMorgan, Goldman Sachs and other financial giants were better than markets expected, helping boost markets, despite the 63% drop in profits at Bank of America.

Negative Factors:

1. The existing US debt limit will be reached sometime in the next 1-2 months and Fitch has warned it may cut the US credit rating if the US Congress fails to act. 

 2. The unexpected decline in Germany’s GDP and euro zone industrial output weighed on market sentiment.

3. The US Federal Reserve official were divided on whether or not to continue QE4. Based on recent US CPI data, the US still can maintain QE measures if the CPI does not rise.

4. LME nickel inventories surged after the New Year holiday, from 139,908 mt on December 31st to 147,342 mt January 17th, a gain of over 5%. Inventory pressure may now prevent LME nickel prices from rising further.

In general, the global economy continues to improve modestly, but without solid economic news, nickel prices will continue to fluctuate and move without strong upward momentum. If positive news is announced, LME nickel prices may advance further.

Domestic Market

Although transactions are currently quiet, most traders are optimistic, believing pre-Chinese New Year holiday stock replenishments will boost domestic nickel prices.