SMM Nickel Market Daily Review (2013-4-1)

SHANGHAI, Apr.2 (SMM) -- Jinchuan Group cut ex-works nickel prices by RMB 2,000/mt, to RMB 115,000/mt on Monday.  In the Shanghai nickel spot market, mainstream traded prices of nickel from Jinchuan Group were in the RMB 115,800-116,000/mt range, and mainstream traded prices of nickel from Russia were in the RMB 114,800-115,000/mt range. Without guidance from LME nickel market, Jinchuan Group’s price cut weighed down Jinchuan Group nickel prices to RMB 115,700/mt and Russian nickel prices to RMB 114,700/mt. With the coming of Qingming Day, dip-buying was reported and transactions were relatively brisk.
 
Based on SMM survey on market sentiment, 60% market players believe that LME nickel prices will fluctuate between USD 16,600-16,900/mt in following week. The Cypriot banking crisis and Italian political chaos still dominated market concern. In addition, central banks of Australia, Japan, UK and Europe will hold interest rate meeting. Besides, the US will announce non-farm employment data. SMM expects that market players will largely adopted a wait-and-see attitude and LME nickel prices will fluctuate around existing level before outcome of these risk events. 
 
The remaining 40% market players believe that LME nickel prices will resume downward momentum to fall below RMB 116,600/mt in the following week. The pessimistic players were concern about conditions in China. First, China’s central banks has been conducting repos operation since the Chinese New Year holiday, sending signals of tightening liquidity. In late March, Chinese government issued strengthened regulation to rein in housing market, which triggered sell-off in China’s stock market. In addition, domestic steel mills demand for nickel was still sluggish. Some nickel suppliers cut offers, but still failing to boost transactions. Furthermore, LME nickel inventories surged from 140,000 in early 2013 to 165,000. These factors will all weigh down nickel prices.