SHANGHAI, Feb. 25 (SMM) --
1. Technical indicators all suggest overselling following the recent plunge in LME nickel prices, and with price support at USD 16,200-16,400/mt. LME nickel prices should resist further losses.
2. Downstream enterprises will resume production following the Lantern Festival on February 24th, which should improve demand for nickel.
1. Economic data from the US were disappointing, with US initial jobless claims hitting 362,000, higher than the expected 355,000 and the previous level of 341,000. The preliminary US manufacturing PMI for February was 55.2, still below the 55.5 expected and the previous reading of 55.8. The US Philadelphia Fed’s manufacturing index for February was -12.5, far below the expected 1.0, and the previous reading of -5.8.
2. Data from the euro zone were also disappointing. The euro zone initial composite PMI for February was 47.3, far below the 49 expected and still below the previous reading of 48.6. The PMI had been recovering for the past three months, but fell unexpectedly, and is a sign of the uncertainty surrounding the euro zone economic recovery. 4Q euro zone GDP was also downbeat, especially results from Germany and France.
3. According to the US Federal Reserve’s interest rate meeting minutes released on Thursday, Fed officials were still divided on monetary policy. Most officials admitted that the asset purchasing plan is helping stabilize financial markets and boosting economic growth. However, some officials believe that continued asset purchasing may cause instability and inflationary risk. Those officials recommend to halt or slow QE measures.
In general, LME nickel prices are unlikely to repeat last week’s steep fall, but will also not rebound in the short term. If LME nickel prices rebound to USD 17,200-17,300/mt in the coming week, nickel prices may move higher as well. Otherwise, LME nickel prices may fall to test support at USD 16,200-16,400/mt.
In China’s spot markets, buying interest will improve since domestic downstream producers will resume production.