SMM Nickel Market Morning Review (2013-2-26)

SHANGHAI, Feb.26 (SMM) -- LME nickel for delivery in three months opened at USD 16,900/mt and closed at USD 16,714/mt on Monday, down USD 233/mt from a day earlier, with the intraday high at USD 16,978 mt and the lowest price at USD 16,688/mt. Daily trading volumes were 3,932 lots, down 1,956 lots. Positions were 119,348 lots, up 219 lots. LME nickel inventories were 155,568 mt, up 1,068 mt.

LME nickel prices slightly advanced after opening and hit a high at USD 16,970/mt. The HSBC’s China manufacturing PMI for February was 50.4, below previous reading and market expectation, but was still above 50. Market did not response actively towards the data, and LME nickel prices slightly fell after testing USD 17,000/mt. During the European trading hours, the Italian presidential election exerted certain impact on market. Coupled with market concern over automatic spending in the euro zone, LME nickel prices continued to fall and close at USD 16,714/mt, down USD 233/mt from a day earlier.

On the macroeconomic front, the Federal Reserve Bank of Chicago National Activity Index was -0.32, below previous reading of 0.25. The Federal Reserve Bank of Dallas manufacturing index for February was 2.2, blow previous reading of 5.5. The downbeat economic data weighed down the US equity market. China HSBC’s manufacturing PMI for February was 50.4, below than 52.2 expected and previous reading of 52.3, the lowest in four months, suggesting slower recovery pace in China’s manufacturing sector.

In neighboring market, the US dollar index rose by 0.39 to 81.86. The US equity market fell after initial surge, with major three stock indexes down by 1.5%. LME base metal prices also pared early gains at the tail of the trading.

The US dollar index was around 82, and overall market sentiment was bearish. SMM expects LME nickel prices will remain weak performance, and Shanghai nickel spot prices will move between RMB 117,500-119,500/mt on Tuesday.