SMM Nickel Market Morning Review (2013-3-8)

SHANGHAI, Mar. 8 (SMM) -- LME nickel LME nickel for delivery in three months opened at USD 16,570/mt and settled at USD 16,610/mt overnight, up by USD 60/mt from a day earlier, with the intraday high at USD 16,724 mt and the low at USD 16,550/mt. Daily trading volumes were 2,113 lots, down 162 lots. Positions were 115,743 lots, up 554 lots. LME nickel inventories were 160,962 mt, down 60 mt.

During the Asian trading hours, the Japan’s central bank decided to keep interest rate unchanged and remained existing assets purchasing plan. LME nickel prices still moved slightly around 5-day moving average and moved between USD 16,550-16,600/mt. During the European and US trading hours, Mario Draghi reiterated that the euro zone economy is expected to recover in 2H 2013. In addition, the US initial jobless claim was 340,000, the lowest in six weeks. The news exerted limited impact on market. LME nickel prices thus still fluctuated narrowly around USD 16,610/mt, up USD 60/mt from a day earlier.

Although the US trade deficit for January was USD 44.45 billion, higher than USD 42.6 billion expected, last week’s initial jobless claim was 340,000, lower than market expectation. Besides, the US ADP employment payrolls increased by 198,000 in February, suggesting that the US employment market is recovering. In response, the Dow Jones Industry Average continued to hit new highs.

The ECB decided to keep interest rate unchanged at 0.75%. As some investors previously expected that interest rate would fall, the euro advanced following the announcement of unchanged interest rate. Meanwhile, Mario Draghi said the euro zone economy did not experience deflation, and will maintain existing monetary policy. However, the ECB cut GDP growth forecast for 2013 and 2014, suggesting that the euro zone face increasing downward pressure.

In Asia, Japan’s central bank president said all efforts will be made to keep inflationary level below 2%. Meanwhile, the euro is expected to fall and the stock market may grow, which will boost confidence in Japan. In China, the plan for urbanization is under way, and is expected to release in 1H 2013.

Close attention should be paid to the US employment data to be released today. 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.