SHANGHAI, Feb. 7 (SMM) – LME nickel prices fell after opening at USD 18,720/mt overnight and dropped further to end at USD 18,350/mt due to the rising bond yields in Italy and persistently high borrowing cost in Spain, down USD 393/mt from a day earlier, with the highest price at USD 18,765/mt and the lowest at USD 18,310/mt. Daily trading volumes were 3,364 lots, up 565 lots. Positions were 115,790 lots, up 1,324 lots from a day earlier. LME nickel inventories were 150,672 mt, falling 162 mt from a day earlier.

Base metals were mainly influenced by the political situation in Europe. In Italy, support for Silvio Berlusconi's People of Freedom party rose to 20.4%, and the country’s 10-year bond yields further increased 13 base points to 4.58%. Besides, the Spanish Prime Minister’s corruption scandal reported no further progress, with the country’s long-term lending cost remaining at a high of 5.45%. Thus, the Euro dropped 0.43% against the dollar.

With respect to economic data, Germany’s manufacturing orders grew 0.8% MoM in December after seasonal adjustment, compared with the 0.9% growth expected and the decline of 1.8% during the previous month. The manufacturing orders before seasonal adjustment staged a decline of 9.2% at an annualized rate in December. Ivey PMI for Canada was 58.9 in January, above the 54 expected and the previous figure of 52.8.

The US dollar index increased 0.22 overnight and LME base metals fell across the broad.

The Bank of England and the European Central Bank will announce interest rate decision for February on January 7, and the US initial jobless claims will also be released. Besides, Congressional hearing of the next governor of the Bank of England Mark Carney, the economic growth forecast by the European Commission and EU summit will also affect market on Thursday.

Spot nickel market will be quieter on January 7 with traded prices expected at RMB 128,500-130,500/mt.