SHANGHAI, Feb.20 (SMM) -- LME nickel for delivery in three months opened at USD 17,940/mt and closed at USD 17,449/mt on Tuesday, down USD 491/mt from a day earlier, with the intraday high at USD 17,980 mt and the lowest price at USD 17,350/mt. Daily trading volumes were 5,818 lots, up 1,654 lots. Positions were 118,023 lots, down 2,440 lots. LME nickel inventories were 153,384 mt, up 114 mt.
Base metal prices briefly rallied during the early Asian trading hours, with LME nickel prices advancing to hit a high at USD 17,980/mt. However, weak Asian stock market weighed down base metal prices. The Nikkei Index and Shanghai Composite Index both fell by 0.33% and 1.55% respectively, which dragged down LME nickel prices to fall below 30-day and 60-day moving average. During the European and US trading hours, LME nickel prices still extend weak momentum, and hit a low at USD 17,350/mt, despite improved ZEW economic sentiment index from Germany. Finally, LME nickel prices closed at USD 17,449/mt, down USD 491/mt or 2.74% from a day earlier.
Former Italian Prime Minister Silvio Berlusconi restated on Tuesday that some countries may be forced to leave the euro zone if the European Central Bank does not become a lender of last resort. "The euro is a weak currency because it does not have a central bank to support it. If it continues to not have a bank to guarantee government bonds and is not prepared to print money, some countries may be forced to return to their national currency," he said.
On the macroeconomic data front, the adjusted output in construction sector in the euro zone dip by 4.8% in December, the largest decline in five months. Germany’s ZEW economic sentiment index rose to 48.2, the highest since April 2010, and far higher than 35.0 expected and previous reading of 31.5%. The US NAHB real estate market index was +46, lower than +48 expected and previous reading of +47.
China’s central bank injected RMB 30 billion liquidity through 28-day repos operation, with bidding rate at 2.75%. Considering the RMB 450 billion reverse repos expired on the same day, net capital recovered totaled RMB 480 billion. Given that RMB 410 billion reverse repos will be expired, net capital recovered is expected to exceed RMB 890 billion on Thursday.
LME nickel prices retreated from the positive territory gains in early February after plunging for two consecutive days. It is expected that LME nickel prices are unlikely to reverse downward momentum suddenly, but will find strong support at USD 17,200/mt. In the Shanghai nickel spot market, arbitrage opportunity may emerge as market following LME nickel prices stumble. SMM expects that spot nickel prices will move between RMB 123,000-125,000/mt on Wednesday.