SHANGHAI, Jun. 4 (SMM) – LME nickel prices overnight opened at USD 14,923/mt, with the high end of the price range USD 15,600/mt, and finding support at USD 14,820/mt. Finally, LME nickel prices closed at USD 15,151/mt, up USD 322/mt from the previous trading day. Trading volumes increased by 1,309 lots, to 5,246 lots, and total positions increased by 718 lots, to 114,305 lots. Inventories grew 276 mt, to 180,072 mt.
LME nickel prices overnight opened at USD 14,923/mt. LME nickel prices fluctuated significantly during Asian trading hours, only surging by USD 530/mt in a merely a few seconds, but plunging by USD 350/mt rapidly. The fluctuations of nickel prices were unlikely a result of economic data released yesterday. China's HSBC PMI fell far short of expectations and the previous month, weighing on nickel prices briefly. But euro zone PMI and German and French PMI was better than forecasts, which was released after the jump in nickel prices. US ISM manufacturing index was only 49, unexpectedly falling short of expectations, and US May construction spending was 0.4%, also lower than the 0.9% expected, pushing down the US dollar index. LME nickel prices maintained early gains and finally closed at USD 15,151/mt, up USD 322/mt. Some market players believe the sharply increases in nickel prices were attributable to the rumors that the SRB will purchase nickel reserves. But SMM confirmed the SRB has not purchase any nickel reserves yet, and the volume will likely fall far short of 30,000 mt.
US economic data released overnight was mostly pessimistic. US May Markit PMI was 52.3, better than the forecast of 52, but US ISM manufacturing index unexpectedly fell below 50, to 49, showing US manufacturing began to shrink. Meanwhile, US construction spending in May was 0.4%, also much lower than forecasts. The sluggish data shows slow US economic recovery and weighed on commodity market. But concerns that the US Federal Reserve will quit Quantitative Easing also eased, so the US dollar index plunged below 83, down 0.73%, while other currencies rose, driving up base metal prices.
UK's PMI in May rose above 50, and PMI in the euro zone, Germany, France and Italy also improved to hit record highs, but remained below 50. Euro zone manufacturing PMI in May was 48.3, remaining below 50 for 22 consecutive months, but hitting a 15-month high, and its first increase in four months. Euro zone manufacturing continued to shrink, but more slowly.
China's official PMI in May was 50.8, up 0.2 percentage point from the previous month, and growing for the 8th consecutive month, easing concerns that HSBC's PMI for China unexpectedly dropped below 50. But HSBC revised China's May PMI from 49.6, to 49.2 yesterday, its first shrink since last October. China's service PMI in May was 54.3, down 0.2 percentage point MoM. China's economic outlook is unclear due to the mixed economic data, with a lack of guidance for investors, and restricting base metal price increases.
The US dollar index plunged 0.73%, hitting a 4-week low; US stocks markets advanced, with the Dow Jones Industrial Average up 0.92%; European stocks markets plummeted. The euro against the US dollar returned to 1.31, closing with gains of 0.62%; Asian stocks markets mostly dropped; LME base metals prices rose across the board.
LME nickel prices will move between USD 15,000-15,400/mt today, and spot nickel prices in Shanghai are expected to be between RMB 106,000-108,500/mt.