SMM Nickel Market Morning Review (2013-2-28)

SHANGHAI, Feb. 28 (SMM) -- LME nickel LME nickel for delivery in three months opened at USD 16,778/mt and settled at USD 16,745/mt overnight, up by USD 17/mt from a day earlier, with the intraday high at USD 16,850 mt and the low at USD 16,640/mt. Daily trading volumes were 2,543 lots, down 2,357 lots. Positions were 116,818 lots, down 3,149 lots. LME nickel inventories were 157,806 mt, up 972 mt.

Boosted by Bernanke’s defense of the central bank's quantitative easing policy, LME nickel prices opened USD 50/mt higher from a day earlier at USD 16,778/mt on Wednesday. However, the stronger US dollar and the uncertainties of Italian political condition prevented LME nickel pries from advancing further after rebounding above 5-day moving average. During the European trading hours, however, LME nickel prices moved higher due to upbeat economic data from the US, and closed at USD 16,745/mt, up USD 17/mt. Monthly rate and annualized rate of the US pending housing for January rose by 4.5% and 9.5% respectively, which pushed up the US equity market higher.

Bernanke’s defense of the central bank's quantitative easing policy boosted the US equity market higher. Impasse on the Italian parliament election remained unimproved, as party leaders were reluctant for a second election.

Upbeat economic data were also major factors boosting the European and US equity market. UK's GDP for 4Q has revised from 0% to 0.3%, and February economic confidence from the euro zone was also better than market expectation. However, the US durable goods orders for January plunged by 5.2% MoM, the largest decline since August, despite 6.3% growth in airplane and non-defense capital goods. Nevertheless, the monthly rate and annualized rate of the US pending housing for January rose by 4.5% and 9.5% respectively, suggesting strong recovering in the US economy.

In domestic market, affected by China central bank’s repos operation, interbank lending rates and repo rate rallied. As of February 27th, the Shibor rose steadily to 3.932%.

Close attention should be paid to February employment data from Germany, and revised GDP for 4Q from the US. SMM expects that LME nickel prices will move between USD 16,650-16,900/mt, and Shanghai nickel spot prices will move between RMB 117,500-119,500/mt on Thursday.