SHANGHAI, Feb. 27 (SMM) -- LME nickel LME nickel for delivery in three months opened at USD 16,705/mt and settled at USD 16,728/mt overnight, up USD 14/mt from a day earlier, with the intraday high at USD 16,768/mt and the low at USD 16,465/mt. Daily trading volumes were 4,900 lots, up 968 lots. Positions were 119,967 lots, up 619 lots. LME nickel inventories were 156,834 mt, up 1,266 mt.
LME nickel price slightly advanced to USD 16,741/mt after opening at USD 16,705/mt. However, a spate of negative news was announced later. First, China’s central bank conducted RMB 5 billion 28-day repos operation, sending signals to tighten liquidity. In addition, the stagnant election in Italy sent Portuguese 10-year government bond yields up 35 base points to 6.56% and Spanish 10-year government bond yields up 43 base points to 5.56%. In response, LME nickel prices fell to hit a low at USD 16,465/mt. During the European and US trading hours, a slew of economic data were positive, including the US new housing sales for January, the consumer confidence index for February and the Richmond Fed manufacturing index for February. Coupled with improved market confidence following Bernanke’s testimony to continue loose monetary policy, LME nickel prices reversed bearish trend and rebounded strongly to close at USD 16,728/mt , up USD 14/mt from a day earlier.
Federal Reserve Chairman Ben Bernanke defended for the central bank's massive bond purchasing in testimony before Congress outweighed the market concern over the Italian presidential election. Fed intended to keep its stimulus policies going until hiring improves significantly, giving no hint of whether the central bank may curtail the so-called quantitative easing before the end of this year. Favorite leader of Democratic Party Pier Luigi Bersani and his allies won more votes nationally than any other coalition, but by a slimmer margin than predicted by exit polls. Bersani's 1% slim margin and failure to win majority in the Senate will not be enough to give him control, which means Italy may have a second presidential election, which fueled concern over political stability in the euro zone. In this context, the euro versus the US dollar fell to hit a low at 1.3018.
A slew of positive news was released from the US. The Conference Board consumer confidence index for February was 69.6, higher than expected 62 and previous reading of 58.6. The S&P/Case-Shiller housing price in 20 cities rose by sharply by 6.8% YoY, the highest since July 2006, suggesting that the real estate market is recovering. The new housing sales for January rose surged by 15.6% to 437,000, the larges single month growth in 20 years. Boosted by positive economic data, three major indexes in the US rose steadily.
Technically, LME nickel prices gain strong upward momentum, but the firm US dollar index will prevent LME nickel prices from rising further. SMM expects that LME nickel prices will move between RMB 16,650-16,900/mt, and Shanghai spot nickel prices may move between RMB 117,000-119,000/mt on Wednesday.