Nickel settled up 0.85% at 1120.5 as both technical and fundamental factors pointed to positive movements and the upswing in nickel prices accelerated. The People’s Bank of China (PBOC) announced late Monday that it would reduce the “required reserve ratio” by 0.5% for banks that mainly lend to small businesses and rural borrowers since June 16. The central bank also lowered the ratio by 0.5 percentage points for finance companies, financial leasing companies, and auto financing companies to improve their capital utilization efficiency and boost consumption. The threat of the ban had little advance influence on nickel values, as speculators were unsure how firm the government’s stance would be. Even after the ban came into effect, there was no panic among commodities traders, as observers remarked upon the stockpiles of nickel ore held by processors, particularly in China. Furthermore, LME nickel inventories continued to run at historically high levels. In the short term, however, Chinese nickel pig iron production is predicted to fall by around 100,000 tons, this year, and possibly twice that amount in 2015. Consequently, the global surplus in nickel will be cut drastically in 2014 and may even move into deficit next year. LME nickel inventories were up 720 mt to 284,712 mt. The PBOC lowered deposit reserve ratio overnight. LME nickel prices opened at USD 18,870/mt, then inched down to find support from USD 18,650/mt. Technically market is under fresh buying as market has witnessed gain in open interest by 6.95% to settled at 5506 while prices up 9.4 rupee, now Nickel is getting support at 1104.4 and below same could see a test of 1088.3 level, And resistance is now likely to be seen at 1133.1, a move above could see prices testing 1145.7.

Trading Ideas:

Nickel trading range for the day is 1088.3-1145.7.

Nickel prices gained as both technical and fundamental factors pointed to positive movements and the upswing in nickel prices accelerated.

In the short term, however, Chinese nickel pig iron production is predicted to fall by around 100,000 tons, this year.

Technically market is under fresh buying as market has witnessed gain in open interest by 6.95% to settled at 5506