Nickel Declines to Three-Month Low on Signs oNickel Declines to Three-Month Low on Signs of Slowing Demand
By Chanyaporn Chanjaroen
June 12 (Bloomberg) -- Nickel fell to the lowest price in more than three months in London on signs that demand for the metal used in stainless steel probably slowed while supply increased.
Orders to be withdrawn from London Metal Exchange-monitored stockpiles dropped 8.6 percent to 444 metric tons, exchange data showed today. The so-called canceled warrants have declined 32 percent this month. Nickel inventory has jumped 90 percent so far in June.
``Current prices are still too high,'' because supplies will increase, said Andrew Silver, a trader at Natixis Commodity Markets Ltd., one of 11 companies trading on the floor of the LME.
Nickel for delivery in three months fell $2,450, or 5.8 percent, to $40,050 a ton on the LME, after earlier dropping $2,700 to $39,800, the lowest price since March 5.
The metal has lost 12 percent since June 6, the day before the LME tightened regulations to ensure stockpiles tracked by the exchange aren't concentrated in the hands of a few companies.
The price of nickel will probably drop by half in coming months because of increasing supply, Alan Heap and Alex Tonks, Sydney-based analysts for Citigroup Inc., said June 6. There will be a surplus of 1,000 tons this year and 48,900 tons in 2008, the bank forecast. Supply lagged behind demand by 14,100 tons last year, it added.
Rising Inventories
LME-monitored inventories climbed 42 tons to 8,922 tons, the exchange said today, bringing total increases this year to 34 percent.
One company held between 30 percent and 39 percent of LME nickel stockpiles and another had 40 percent to 49 percent as of June 8, according to the latest LME data. As of June 5, the data showed one company holding 50 percent to 79 percent, and another had 30 percent to 39 percent.
Among other LME-traded metals, aluminum fell $25 to $2,699 a ton, lead declined $20 to $2,325 a ton, and zinc slid $40 to $3,710 a ton. Tin was unchanged at $13,975 a ton, and copper dropped $185 to $7,175 a ton.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at
Last Updated: June 12, 2007 16:00 EDT