SMM Nickel Market Morning Review (2013-2-18)

SHANGHAI, Feb. 18 (SMM) -- LME nickel for delivery in three months opened at USD 18,290/mt and closed at USD 18,321/mt, up by USD 49/mt from a day earlier, with the intraday high at USD 18,383/mt and the low at USD 18,184/mt, up USD 49/mt from a day earlier. Daily trading volumes were 1,871 lots, up 211 lots. Positions were 118,501 lots, down 1,136 lots. LME nickel inventories were 153,480 mt, down 240 mt.

Transactions in China stagnated during holiday. The GDP for Q4 continued to contract in the euro zone, with contraction in Germany and France most notable, exerting negative impact on market. In the US, economic data were mixed, but the good news is that the initial jobless claim in the US fell sharply. In general, trading sentiment was relatively quiet during holiday, and LME nickel prices only fluctuated marginally. Last Friday, LME nickel prices settled at USD 18,321/mt, up USD 49/mt from a day earlier.

During Chinese New Year holiday, overseas economic news was mixed. The industrial output in the euro zone for December rose by 0.7%, exceeding 0.3% expected. In addition, the US retail sales for January rose by 0.1% MoM, slightly better than market expectation. At the week ending on February 9th, the US initial jobless claim fell by 27,000 on weekly basis to seasonally-adjusted 341,000, suggesting that employment is improving in the US. The US New York Fed manufacture index for February was 10.04, higher than -2.00 expected and previous reading of 7.78, boosting market confidence. However, the GDP for 4Q in the euro zone contracted by 0.9% YoY and 0.6% MoM, beyond economists’ expectation. GDP contraction in Germany and France was most notable. Besides, the industrial output in January in the US fell by 0.1%, lower than 0.2% expected.

China’s CPI for January fell 0.5 percentage point on a monthly basis, while PPI for January was down 1.6% YoY and up 0.2% MoM. Industrial producer purchase prices fell by 1.9% YoY but grew 0.3% MoM. In January, China’s total trade value hit RMB 2.17 trillion, with export value up 25% YoY and import value up 28.8% YoY. With regard to credit, total credit for January hit historical high of RMB 2.54 trillion. Considering current month loans and foreign reserves, liquidity was relatively loose, which fuels expectation that China’s central bank may curb liquidity. In addition, industrial added value for December rose by 10.3% YoY. In general, China’s macro economy is relatively healthy.
 
Following last week’s correction, technical indicators suggested that LME nickel prices are unlikely to surge if no solid news is available. SMM expects that LME nickel prices will continue to hover around existing level, and Shanghai nickel spot prices will move between RMB 127,500-130,000/mt on Monday.