SMM Nickel Market Morning Review (2013-3-13)

SHANGHAI, Mar.13 (SMM) -- LME nickel LME nickel for delivery in three months opened at USD 16,875/mt and settled at USD 17,003/mt overnight, up by USD 153/mt from a day earlier, with the intraday high at USD 17,088 mt and the low at USD 16,747/mt. Daily trading volumes were 3,601 lots, down 415 lots. Positions were 115,778 lots, up 2,851 lots. LME nickel inventories were 161,316 mt, down 144 mt.

During the Asian trading hours, Asian stock markets all slipped, with the Shanghai Composite Index falling by over 1% and moving below 2,300 points again. Therefore, LME nickel drifted lower, despite of a high opening. However, during the European and US trading hours, LME nickel prices rallied on weak US dollar and finally closed at USD 17,003/mt, up USD 153/mt from a day earlier.

The report from the US Department of Labor revealed that job vacancy for January increased to 3.69 million, up 8% compared to 3.61 million in December. Number of unemployed people was 12.33 million, which means that 3.3 people will compete for 1 job, which is lower than 3.4 in December, suggesting that employment market is recovering.

The UK’s trade deficit for January narrowed, but the industrial output for January unexpected fell by 1.2% MoM, higher than 0.1% expected and previous reading of 1.1%. Besides, the monthly rate of manufacturing for January contracted by 1.5%, far below market expectation. The weak economic data fueled market concern that the UK’s economy may slip into anther recession.

Chinese People's Political Consultative Conference held its closing ceremony on Tuesday, but reform and policies from the conference were below market expectation. Besides, China’s central bank conducted RMB 26 billion repos operation, fueling concern that China’s central bank may tight liquidity.

The US dollar index fell by 0.15%. The US stock markets were mixed, but the Dow Jones Industrial Average hit new high. Asian stock market all slipped, while European stock market fell rapidly. Base metals all moved higher overnight.

The US will announce retail sales data on Wednesday. SMM expects that LME nickel prices will move around USD 17,000/mt and may likely to rebound on positive news, and Shanghai nickel spot prices will move between USD 16,700-17,200/mt on Wednesday.