SMM Nickel Market Morning Review (2013-1-28)

SHANGHAI, Jan. 28 (SMM) -- LME nickel for delivery in three months opened at USD 17,414/mt and closed at USD 17,368/mt, up by USD 28/mt from a day earlier, with the intraday high at USD 17,470/mt and the low at USD 17,270/mt, up USD 322/mt from a day earlier. Daily trading volumes were 2,716 lots, up 162 lots. Positions were 110,020 lots, up 1,170 lots. LME nickel inventories were 150,216 mt, up 498 mt.

LME nickel prices opened USD 80/mt higher from a day earlier at USD 17,414/mt last Friday. During the Asian trading hours, LME nickel prices fluctuated narrowly around 20-day moving average due to absence of solid economic news. During the European trading hours, Germany’s IFO business sentiment index for January was better than market expectation, but the US new housing sales data for December was downbeat, making LME nickel prices to struggle. Finally, LME nickel prices closed at USD 17,368/mt, up USD 28/mt from a day earlier.

According to the US Department of Commerce, the US new housing sales for December fell sharply by 7.3% MoM, and the seasonally-adjusted new housing sales annualized to 369,000, lower than 385,000 expected. However, the housing sales still grow by 13.9% from a year earlier.  The US Department of Commerce expects that total housing sales for 2012 is around 367,000 units, up 20% YoY, the highest since 2009. Despite sharply year on year growth, the new housing sales for 2012 are the third worst since 1963.  The UK’s initial GDP for 4Q fell 0.3%, better than market expectation. The Germany’s January IFO business sentiment index increased from 102.4 to 104.2.

According to the ECB, many banks paid back more debts than the EUR 137 billion expected. The Fitch cut Cyprus’ credit rating, and put its outlook into negative.

In China, the National Bureau of Statistics (NBS) revealed that China’s industrial profits for 2012 totaled RMB 5.56 billion, up 5.3% YoY. Profits for December were RMB 895.2 billion, up 17.3% YoY.

LME base metal largely drifted lower. The euro surged, weighing down the US dollar. The US equity markets rallied across the board, with the S&P 500 index broke through 1,500 points. 

Close attention should be paid to the US GDP for 4Q, the Fed interest rate meeting result for January and the nonfarm employment data for January. SMM expects that LME nickel prices will move between USD 17,200-17,500/mt, and Shanghai nickel spot prices will move between RMB 122,500-124,500/mt on Monday.