Nickel prices rally to a 27-month high on supply concerns

Three month LME nickel prices rallied 4.2% higher yesterday, posting gains for a third straight session as tighter fundamentals continued to support the metal higher. Intraday prices rallied towards $19,786/tonne before pulling back to close at $19,405 with activity early on today pushing nickel prices to its highest level since February 2012, trading towards $20,500/tonne. After struggling to breakout significantly above $15,000 throughout H2 2013 and the first two months of 2014 prices have rallied almost 45% since the start of the year, posting weekly gains in all but two of the past 14 weeks.

The euro declined from a 2 and half year high yesterday as the currency pulled back towards 1.3840 against the dollar where support at the 50 day MA held firm. As expected, the base rate was left unchanged at 0.25%, prompting a surge towards the 1.40 level as it reached 1.3993. However, the brief rally was quickly reversed and the currency faced a precipitous drop as comments by ECB President Draghi hinted at policy action as early as June. Growth optimism which has been a recurring theme in past statements was again the rhetoric for yesterday’s press conference, however, the ECB placed greater emphasis on the threat of low inflation and the current level of the euro, and investors will be paying close attention to the latest inflation forecasts for any hints of how significant this action could be.

Iron ore prices dropped to their lowest levels since September 2012 as the TSI measure pulled back towards $103/tonne 62% Fe CFR Tianjin on increasing port stocks and slowing demand which have put pressure on finished steel prices. After a slight drawdown in early April, iron ore port stocks climbed to a fresh record high, reaching just over 110m tonnes and climbing over 60% since the start of the year. As global miners continue to expand output, choosing to focus on low cost base material, prices could drop below $100/tonne before higher marginal cost producers curtail production. SHFE rebar futures for October delivery traded 0.6% lower, pulling back towards RMB 3,160/tonne on falling volumes as market participants anticipate further declines.

Three month LME nickel prices extend gains on supply concerns

LMNIDS03 Comdty LME NICKEL 3 2014 05 09 07 49 32

EUR declines against USD on hints of ECB action in June

EUR Curncy Euro Spot Daily 09 2014 05 09 07 35 28

Iron ore prices CFR Tianjin drop towards $103/tonne on rising port stocks...

TSIPIO62 Index China Import Iro 2014 05 09 07 57 41

...leading to weaker SHFE rebar futures as buyers hold out for further declines

RBTV4 Comdty Deformed Bar Fut 2014 05 09 08 01 49

Events for today

0600

JP

Mar

Leading Index

0700

DE

Mar

Trade Balance

0930

UK

Mar

Trade Balance

0930

UK

Mar

Industrial Output

0930

UK

Mar

Manufacturing Output

 

 

Topics: ECB, EUR, Iron Ore, LME, Nickel
More from: Kash Kamal