SMM Nickel Market Morning Review (2013-3-1)

SHANGHAI, Mar.1 (SMM) -- LME nickel for delivery in three months opened at USD 16,800/mt and closed at USD 16,605/mt on Thursday, down USD 93/mt from a day earlier, with the intraday high at USD 16,861 mt and the lowest price at USD 16,605/mt. Daily trading volumes were 4,732 lots, up 3,977 lots. Positions were 117,099 lots, up 281 lots. LME nickel inventories were 157,980 mt, up 174 mt.

During the morning trading hours, LME nickel prices slightly advanced above 5-day moving average after following for two consecutive weeks. However, LME nickel prices later fell below 5-day moving average again after lingering around USD 16,760/mt, despite rally in Asian stock markets. During the European and US trading hours, last week’s initial jobless claim and February Chicago Purchasing Managers index from the US were both optimistic. However, the GDP for Q4 was far below market expectation. The US dollar index thus advanced as a result, which weighed down LME nickel prices to close at USD 16,605/mt, down USD 93/mt from a day earlier.

On the macroeconomic front, the two parties still did not reach consensus on automatic spending cut. The US dollar index surged to 82.

On the macroeconomic data front, the US GDP for Q4 revised from -0.1% to 0.1%, far below 0.5% expected. The US employment market slightly improved. Last week’s initial jobless claim fell by 18,000 to 344,000. The Chicago Purchasing Managers index improved from 55.6 to 56.8, higher than market expectation. Germany’s seasonally-adjusted unemployment data for February reduced by 3,000 to 2.92 million, and unemployment rate was 6.9%, the lowest in 20 years. The positive data boosted European equity market.

In China’s domestic market, China’s stock market rose by 2.26% as market rumored that Chinese government may launch a new round of QE, but rumor needs further confirmation. China’s central bank temporarily eased open market operation on Thursday, and this week’s net capital return totaled RMB 5 billion. It is believed the central bank's move tighten liquidity at the end of the month is mainly due to news that new foreign exchange at financial institutions totaled RMB 600 billion in January, exceeding RMB 500 in the whole year of 2012. After China’s stock market closed, the China Securities Regulatory Commission (CSRC) dispelled the rumor on reissuing of new stocks in April.

PMI from major economies and nonfarm employment data from the US will continue to affect base metal price movement. SMM expects that LME nickel prices will move between USD 16,400-16,900/mt and Shanghai nickel spot prices will move between RMB 116,500-118,500/mt on Friday.