SMM Nickel Market Morning Review (2013-3-25)

SHANGHAI, Mar.25 (SMM) -- LME nickel LME nickel for delivery in three months opened at USD 16,900/mt and settled at USD 17,122/mt overnight, up by USD 260/mt from a day earlier, with the intraday high at USD 17,209 mt and the low at USD 16,780/mt. Daily trading volumes were 3,362 lots, up 447 lots. Positions were 111,773 lots, down 273 lot. LME nickel inventories were 162,762 mt, up 474 mt.

LME nickel prices largely fluctuated around 10-day moving average at USD 16,850/mt during the Asian trading hours due to absence of solid economic news. During the European trading hours, as market expectation over salvage agreement in Cyprus has increased, LME nickel prices advanced to close at USD 17,122/mt, up USD 260/mt from a day earlier.

East concern over Cyprus crisis drove the Euro to rise sharply on March 23rd. Germany’s IFO business sentiment index for March was 106.7, lower than 107.8 expected and previous reading of 107.4, suggesting that the US economy was negatively affected external environment. In Italy, Bersani held a meeting with other parties focusing on reform. In response, the yielding rate of Italian’s 10-year government bond fell by 7.4 basis points to 4.503%. Fitch put UK’s AAA credit rating into observation, and will finish assessment over the US credit rating before late April. Generally speaking, negative impact from the euro zone is waning. In addition, economic data from the US were positive, suggesting that the US economy is recovering, boosting market sentiment.

In China, the Ministry of Finance revealed that China’s profits at state-owned companies rose by 9.7% YoY from March to February.

It is expected that development of Cyprus problem will be key factor affecting base metal price movement. SMM expects that LME nickel prices will move around USD 16,800-17,300/mt and Shanghai nickel spot prices will move between RMB 118,000-120,000/mt on Monday.