SMM Nickel Market Morning Review (2013-2-4)

SHANGHAI, Feb. 4 (SMM) - LME nickel price last Friday opened at USD 18,329/mt, with the high end of the price range USD 18,650/mt, and finding support at USD 18,300/mt. Finally, LME nickel prices closed at USD 18,639/mt, up USD 241/mt. Trading volumes decreased by 2,861 lots, to 3,166 lots, and total position decreased by 2,123 lots, to 115,116 lots. Inventories grew by 888 mt, to 150,900 mt.

China's official PMI for January released last Friday morning was 50.4, lower than the 51.0 expected and the previous 50.6. As a result, the Shanghai Composite rose by 1%, but failed to boost base metals prices. LME nickel prices fluctuated narrowly around USD 18,329/mt, with the market cautious. During European and US trading hours, both manufacturing index and unemployment rate in the euro zone was better than the preliminary data, invigorating the market. Despite the poor US employment data released later in the day, market optimism remained. LME nickel prices climbed sharply, and finally closed at USD 18,639/mt, up USD 241/mt.

According to US Labor Department, the seasonally adjusted number of US non-farm employment in January was 157,000, slightly lower than expectations and the previous data. Unemployment rate rose to 7.9%, but the revised employment data in November and December 2012 was up. Besides, the ISM shows US PMI in January rose to 53.1, its highest in nine months (since April 2012), and showing US manufacturing expands further. Final CCI from University of Michigan in January unexpectedly rose to 73.8. The major economic data reflected US economy continued to grow, and helping ease concerns that US is in the face of recession.

In Europe, Markit announced last Friday euro zone final January PMI was 47.9, hitting a eleven-month high, and better than expected and the preliminary 47.5, with the final data for December 46.1. Germany's January PMI was revised to 49.8. The improving manufacturing data shows euro zone economy is recovering.

In China, the CFLP announced China's January PMI fell to 50.4, while HSBC's January PMI for China was revised to a two-year high of 52.3. Besides, the SAFE announced domestic international current account surplus in 2012 was USD 213.8 billion, and capital and financial account deficit was USD 117.3 billion, and international reserve assets increased by USD 96.5 billion.

LME base metals prices rose across the board. The euro soared and once broke through 1.3700; US stocks also outperformed, with the Dow Jones Industrial Average stood at 14,000 for the first time since October 2007.

LME nickel prices will fluctuate between USD 18,400-18,900/mt today. Spot nickel prices are expected between RMB 128,500-130,500/mt.