SMM Nickel Market Morning Review (2013-2-5)

SHANGHAI, Feb. 5 (SMM) – LME nickel price overnight opened at USD 18,622/mt, with the high end of the price range USD 18,770/mt, and finding support at USD 18,550/mt. Finally, LME nickel prices closed at USD 18,650/mt, up USD 11/mt. Trading volumes decreased by 605 lots, to 2,563 lots, and total position increased by 3 lots, to 115,119 lots. Inventories grew by 6 mt, to 150,906 mt.

Due to the political crisis overnight in the euro zone, European stocks markets were depressed. Stocks markets in Germany and France dropped by in excess of 2.5%, and stocks markets in Italy fell by 4.5%. Spain's 10-year government bond yields surged by 22 basis points to 5.43%, and Italy's 10-year government bond yields also advanced 15 basis points, to 4.48%. In this context, LME nickel prices slowed increases and finally closed at USD 18,650/mt, up USD 11/mt.

According to Spain's Labor Department, the number of unemployment in January increased by 132,000, compared to the forecasts of a 150,000 increase, and the number in the previous month decreased by 59,100. Spain's unemployment rate in January rose 2.7%, while the rate in the previous month was down 1.2%, with the number of unemployment reaching 4.98 million mt. It was reported that Spain's Prime Minister, Mariano Rajoy, and members of his governing Popular Party accepted or made under-the-table payments.The improving political scandal is depressing market confidence towards the country's debt reconstruction. As a result, Spain's 10-year government bond yields rose by 10 basis points to 5.43%, and Italy's 10-year government bond yields also advanced 9 basis points, to 4.42%. Besides, euro zone December PPI dropped for the second consecutive month to 0.2%; euro zone Sentix's investor confidence index in February rose for the sixth straight month, to -3.9. US Commerce Department announced US finished product orders in December rose by 1.8%, to USD 484.76/mt billion, slightly lower than forecasts.

Due to negative news from Spain, the euro plunged. LME base metals prices were mixed, and European and US stocks markets were sluggish.

LME nickel prices will continue to fluctuate today. Spot nickel prices are expected between RMB 129,500-130,500/mt.