Tuesday, 31 March 2015 17:13
LONDON: Nickel plunged to near a six-year low on Tuesday on worries over record stockpiles, weak demand for stainless steel and growing doubts over the fate of Indonesia’s ore export ban that many believed would tighten the market.
Nickel prices have nearly halved since hitting two-year highs above $ 21,000 last May after Indonesia – previously the world’s top exporter of nickel ore – last year banned all unprocessed ore exports.
The ban was expected to lead to a supply crunch in top consumer China, and could yet do so, but for now, bullish investors are losing their nerve, especially with nickel stocks at record levels.
“I think there are some players in the market who think Indonesia is going to ease or relax its ban on exports of ore. I’m not at all convinced (but) if there were any relaxation, the whole bull story for nickel collapses,” said BNP Paribas strategist Stephen Briggs.
Three-month nickel on the London Metal Exchange extended a selloff to $ 12,400, its weakest since May 2009. The metal, used widely in stainless steelmaking, later pared losses to trade at $ 12,635 a tonne by 1051 GMT, down 2 percent for the day and nearly 10 percent for the month.
LME stocks are sitting at a record above 430,000 tonnes, equivalent to almost three months of global use.
Traders said selling by momentum-based CTA (commodity trade advisor) funds had driven the powerful selloff, before some arbitrage opportunities between LME and Shanghai nickel helped prices recover.
In other metals, bellwether LME copper slipped by 1 percent to $ 6,021.50 a tonne after hitting its lowest in more than a week earlier at $ 6,007.
The strong dollar, on track for its best quarter since 2008, weighed on copper and other metals in European trading hours by making them costlier for all non-U.S. investors.
Also a concern was weak demand from China, where the government is trying to shore up the ailing property market by announcing on Monday a bigger tax break for home buyers for the second time in six months.
In other metals, aluminium fell 0.6 percent to $ 1,786 a tonne while tin fell 2 percent to $ 16,710, having earlier hit $ 16,680 – its lowest since June 2010, under pressure from concerns about swollen supplies.
Aluminium maker Alcoa Inc said on Monday it will shut its only remaining smelter in Brazil, the latest victim of a mix of weak metal prices and high energy costs.
Copyright Reuters, 2015
