SMM Nickel Market Morning Review (2013-3-12)

SHANGHAI, Mar.12 (SMM) -- LME nickel LME nickel for delivery in three months opened at USD 16,678/mt and settled at USD 16,850/mt overnight, up by USD 130/mt from a day earlier, with the intraday high at USD 16,852 mt and the low at USD 16,530/mt. Daily trading volumes were 3,186 lots, up 703 lots. Positions were 112,927 lots, down 2,407 lots. LME nickel inventories were 161,460 mt, up 522 mt.

Better-than-expected non-farm employment data from the US boosted the US dollar to 82.924 points. In response, base metal prices tumbled. However, LME nickel prices advanced along with US equity market and stood above 10-day moving average.

Although LME nickel prices fall to around USD 16,650/mt during the Asian trading hours, LME nickel prices later advanced on falling US dollar index during the European trading hours. Finally, LME nickel prices closed at USD 16,850/mt, up USD 130/mt from a day earlier.

Germany’s exports for January rose by 3.1% YoY, the largest increase since October 2012, which was mainly due to orders from regions out of Europe, suggesting that Germany’s trading began to rebound after experiencing the toughest period in Q4 2012. Italy’s final GDP for Q4 annualized 2.8%, lower than market expectation. Greek annualized final GDP for Q4 has revised from 6.0% to 5.7%. French’s annualized industrial output for January fell by 3.5%, with previous reading of -3.1%. Portugal’s GDP for 2012 fell by 3.2%, with the county stepping into the most severe recession in 37 years.

The weakness in China’s PPI and retail sales announced at the weekend is the major reason behind decline in China’s stock market on Monday. According to the NDRC, China’s CPI for 2013 may be around 3%. However, at last Tuesday's government work report, China aims to control CPI below 3.5%. China's concern over inflation grows, which fuels expectation that Chinese government may tighten liquidity in 2H 2013. In addition, according to data from CAAM, China’s auto sales for February fell by 13.6% YoY in February. YTD sales through February rose by 14.7% YoY. Total sales for 2012 rose by 4.33% YoY. The CAAM predicts that China’s auto sales will grow by 7% in 2013.
 

The US dollar index fell by 0.05%. Asian stock markets were mixed, while the US equity markets rallied with the Dow Jones Industrial Average hitting new highs. The European stock markets slightly closed with losses. LME base metal prices closed mixed, but largely rebounded.

Technical indicator suggested that LME nickel pries will move to USD 16,600-17,000/mt and Shanghai nickel spot prices will move between RMB 117,000-119,000/mt on Tuesday.