SMM Nickel Market Morning Review (2013-3-6)

SHANGHAI, Mar.6 (SMM) -- LME nickel LME nickel for delivery in three months opened at USD 16,560/mt and settled at USD 16,673/mt overnight, up by USD 130/mt from a day earlier, with the intraday high at USD 16,710 mt and the low at USD 16, 493/mt. Daily trading volumes were 3,159 lots, up 399 lots. Positions were 117,125 lots, up 1,888 lots. LME nickel inventories were 160,548 mt, down 108 mt.

China’s Premier revealed at government work report that China’s planned financial deficit for 2013 was RMB 1.2 trillion, up RMB 400 billion YoY, which sent China’s stock market up by 2.23%. In response, LME nickel prices rebounded to hit a high at USD 16,710/mt during the Asian trading hours. During the early European trading hours, LME nickel prices slight fell due to absence of solid economic news. However, LME nickel prices later advanced to close at USD 16,673/mt, up USD 130/mt as the Dow Jones Industrial hit historical high on better-than-expected service data from the US.

Both Germany and France reported improved PMI in service sector in February. The euro zone February service and composite PMI finalized at 47.9, up 0.6 compared to previous reading and market expectation. Following the data release, the US dollar index fell to weekly low at 81.90. Based on poll result from Italy, a quarter of Italian voters were support for a second round of election. However, similar impasse may still repeat, adding uncertainties surrounding the Italian election.

The US ISM non-manufacturing PMI for February was 56, higher than market expectation. ICSC-Goldman Store Sales rose by 0.2%. Meanwhile, it is expected that Janet Yellen, the most promising successor of Fed Reserve, may continue QE, which will be helpful for the US economic recovery. In response, the Dow Jones Average and Standard & Poor rose by 0.89% and 0.96% respectively, with the Dow Jones Average hitting historical high.

The Australian central bank settled interest rate for March at 3.0%, flat with previous reading and market expectation. The bank said it may adjust policy based on assessment on economic outlook, but believed that risks for global economy to fall is reducing. China’s government work report pointed out that China aims 7.5% GDP growth, 3.5% CPI growth, 13% M2 Growth in 2013, which was largely within market expectation. The data hinted that China’s monetary policy may shift from loose to neutral stance in 2013.

It is expected that LME nickel prices may advance to move between 5-day and 10-day moving average and shall fluctuate between USD 16,450-16,900/mt on Wednesday, and Shanghai spot nickel prices may move between RMB 117,000-119,000/mt on Wednesday.