SMM Nickel Market Daily Review (2013-3-4)

SHANGHAI, Mar.5 (SMM) -- Jinchuan Group cut ex-works nickel prices by RMB 1,000/mt, to RMB 117,000/mt Monday. During the morning trading hours in the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were in the RMB 117,600-117,800/mt range, and mainstream traded prices of nickel from Russia were in the RMB 116,800-117,000/mt range. After Jinchuan Group cut ex-works nickel prices, Jinchuan Group nickel prices fell to RMB 117,500/mt and Russian nickel prices fell to RMB 116, 500/mt, which attracted some bargain hunters. However, transactions turned quiet during the afternoon trading hours.

Based on SMM survey result on market sentiment, 60% market players believe that LME nickel prices may fall to test support at RMB 16,300-16,400/mt after hovering at existing level in the following week. The US Senate did not passed legislation needed to avoid automatic budget spending cuts, with both political parties rejecting proposals by the other. As a result, beginning on March 1st, USD 85 billion in automatic spending cuts will now be phased in over the next seven months. In addition, shares of 49 real estate enterprises fell to daily decline limited following Chinese government’s stern measures to rein on real estate market. Besides, China’s central bank also release signals to tighten credit. These negative factors will exert negative impact on LME nickel prices.

The following 40% market players believe that LME nickel prices shall move between USD 16,500-16,800/mt during the following week. Although the macroeconomic news was relatively negative, other events will fall this week, including the Fed's Beige Book, and the US non-farm employment data. It is expected that if these economic data are positive, LME nickel prices may be boosted. Furthermore, with the coming of spring, downstream demand will recover slightly, which will ease market concern. Therefore, they hold that LME nickel prices will remain stable in the coming week.