SHANGHAI, Mar. 11 (SMM) –
LME Nickel Price Trend
Despite the absence of solid economic news last week, major economies still show steady signs of recovery. Concerns over the possible end of QE and an acceleration in economic growth data sent US equities and the US dollar higher. The spread between LME nickel prices and the Dow Jones Industrial Average was now at an all-time high.
The surge in the US dollar is closely related to the rally in US equity markets, but the rise in the US dollar is expected to slow. Based on historical data, the spread between LME nickel price and the Dow Jones Industrial Average usually wanes after initially expanding, so SMM is cautiously optimistic towards the LME nickel price outlook in the coming week.
The chart shows that on March 1st LME nickel prices hit the low end of the price track going back to August 2012, but then bucked the trend of expected rebound after automatic spending cuts were implemented in the US.
Similar support was also seen in LME copper price trends, but price range for LME copper narrowed, and followed earlier copper price trends.
LME nickel and copper price trends will be clear in the short term. Since base metal prices often move in contrast to the US dollar, the recent weakness in base metal markets was also related to the stronger US dollar index.
LME nickel prices moved inversely with the US dollar index, but were quite resilient to declines after the US dollar touched a high of 82.5 following automatic spending cuts, and is a positive signal for the LME nickel outlook. In addition, with a series of important economic reports to be released in early March, there is a chance that LME nickel prices will stage a rally if the reports are positive.
In general, although LME nickel prices still hovered at lows, technical indicators were pointed upward. However, overseas economic sentiment was not optimistic, so LME nickel prices are unlikely to fall sharply in the coming week.
In China’s domestic markets, stainless steel inventories in Wuxi fell sharply, while purchases of refined nickel in spot markets rose, helping keep offers relatively firm. SMM expects firm price offers and improving transactions will continue in the coming week.