SHANGHAI, Mar. 25 (SMM) --

Positive Factors:

1. US initial jobless claims announced last Thursday were 336,000, slightly lower than market expectations of 340,000. The monthly rate of the Conference Board leading economic indicator for February rose by 0.5%, also higher than the 0.4% expected. The Philadelphia Fed manufacturing index for March also improved sharply from -12.5 to 2.0.

2. HSBC’s initial China manufacturing PMI for March was 51.7, far higher than the 50.8 expected and up from February’s 50.4.

Negative Factors:

1. Manufacturing PMI for March in European countries continues to fall or stagnate. France’s manufacturing PMI for March remained unchanged at 43.9, but Germany’s manufacturing PMI for March fell from 50.3 to 48.9. Germany’s initial composite PMI for March was 51.0, its lowest level in three months. France’s initial composite PMI for March was 42.1, also its lowest level since March 2009. The euro zone manufacturing PMI for March fell from 47.9 to 46.6, and this disappointing economic data only added to falling market confidence.

2. Cyprus received an ultimatum from the European Central Bank to raise EUR 5.8 billion or the bank would cut off emergency financial support for the country next Monday. In addition, Euro group Chairman Jean-Claude Juncker also said any possibility Russia would provide help to Cyprus was low.

3. Standard & Poor’s cut Cyprus’ credit rating to CCC. In addition, the euro zone is considering closing and freezing deposits at two banks in Cyprus, which is greatly affect confidence of depositors in Cyprus.

Collectively speaking, market concerns over the European debt crisis linger, with risks growing following the Cyprus bailout. LME nickel prices may rebound if a solution is reached, but otherwise, LME nickel prices face the increasing likelihood of falling.

In spot markets, a wait-and-see sentiment is still strong since stainless steel markets are still sluggish and LME nickel prices remain volatile. SMM expects caution to dominate trading given that no improvement in downstream demand is expected in the short term. SMM expects transactions will mainly be made among traders in the coming week. Trading will be sluggish unless nickel prices rise.