SHANGHAI, Jun. 25 (SMM) – LME nickel prices overnight opened at USD 14,050/mt, with the high end of the price range USD 14,050/mt, and finding support at USD 13,625/mt. Finally, LME nickel prices closed at USD 13,660/mt, down USD 426/mt from the previous trading day. Trading volumes increased by 74 lots, to 3,924 lots, and total positions increased by 1,250 lots, to 121,691 lots. Inventories grew by 786 mt, to 186,198 mt.
Rumors said that Chinese government will not take measures to ease liquidity problem soon, increasing market concerns. LME base metals prices fell with Asian stocks, with LME nickel prices falling to USD 13,686/mt. LME nickel inventories grew by 786 mt, to 186,198 mt.
"Money shortage" in China is the single largest reason behind the slump in financial markets yesterday. The Monetary Policy Committee of the People's Bank of China (PBOC) held its 2Q conference for 2013. According to the conference, liquidity in China's banking system is now within rational level and the PBOC will continue its prudent monetary policy, quashing hopes of further easing monetary policy. This, coupled with brief banking system failure in Bank of China and Industrial and Commercial Bank of China, triggered concerns over liquidity crunch in China and panic sell-off among investors. As a consequence, China's A-shares plummeted 5.30%, with shares in financial and real estate sectors suffering the biggest losses. Goldman Sachs cut its forecast for China's GDP growth in 2013 from 7.8% to 7.4%.
Minneapolis Federal Reserve President Narayana Kocherlakota said Monday that financial markets are wrong to view the Federal Reserve as having become more hawkish in its views on the need to tighten monetary policy, weighing down the US dollar index somewhat. Finance ministers failed to agree on common European Union rules for winding down troubled banks after more than 12 hours of talks that ran into Saturday's early hours, with no consensus reached over the issue of bearing bank losses. The ministers agreed to reconvene Wednesday in a further bid to thrash out a deal. EU Summit will be held on Thursday.
European and US stocks suffered heavy losses. LME base metals closed down across the board.
LME nickel prices will test support from USD 14,000/mt today, and spot nickel prices in Shanghai are expected to move between RMB 96,500-97,500/mt.