Nickel Trades Near 3-Month Low as Use Slows;Nickel Trades Near 3-Month Low as Use Slows; Copper, Zinc Fall
By Chanyaporn Chanjaroen
June 13 (Bloomberg) -- Nickel traded close to a three month-low low in London on speculation swelling stockpiles are a signal demand from stainless-steel producers is slowing. Copper and zinc also dropped.
Inventories of nickel tracked by the London Metal Exchange have risen 36 percent this year to an 11-month high. Stainless steelmakers consume two-thirds of the world's nickel. Outokumpu Oyj, the world's third-largest producer, is cutting output because of slowing demand for the alloy.
``The softer fundamental outlook for stainless-steel production is going to drive nickel down,'' Max Layton, an analyst at Macquarie Bank Ltd. in London, said today in a telephone interview.
Nickel for delivery in three months rose $50, or 0.1 percent, to $40,100 a ton at 12:28 p.m. in London. The contract earlier fell to $38,900 a ton, the lowest since Feb. 22. It's down 6.6 percent this week. Layton expects nickel to move toward $30,000 a ton in ``the next few months.''
Nickel has lost about 12 percent since trading at a record $51,800 a ton on May 9 as stockpiles increased. Stainless-steel demand this quarter will fall from the first three months of the year as customers seek cheaper alternatives to nickel, Arcelor Mittal, the world's largest steel producer, said May 16.
Stockpiles of nickel tracked by the LME rose 126 tons, or 1.4 percent, to 9,048 tons, the exchange said today in a daily report. That's the highest since July 7.
Shares Fall
Shares of nickel producers dropped. Those of OAO GMK Norilsk Nickel, the world's largest metal miner, fell as much as 2.8 percent in Moscow. Paris-based Eramet SA, which operates the world's largest ferronickel smelter in New Caledonia, fell as much as 4.7 percent, the most since May 14.
Copper fell for a second day, losing $40 to $7,135 a ton. The metal, used in wires and pipes, has declined as China, the world's largest user, slowed imports due to near-record prices and a buildup in domestic inventories.
Stockpiles held in warehouses not monitored by the Shanghai Futures Exchange may be as much as 120,000 tons, according to John Kemp, an analyst at Sempra Metals Ltd. in London.
Imports of the metal and related products into the world's most populous country were 220,561 tons in May, down 28 percent from April and 48 percent higher than a year earlier.
``We would expect imports to remain at lower levels through the seasonally weaker demand months of the summer,'' Nick Moore, an analyst at ABN Amro Holding NV, said today in a report.
LME-monitored copper inventories declined 450 tons, or 0.4 percent, to 119,875 tons, the exchange said today, taking this year's decline to 34 percent.
Zinc, used to galvanize steel, dropped as much as 3.9 percent to $3,565 a ton, the lowest intraday price in three days. Stockpiles jumped 2,800 tons, or 3.9 percent, to 74,050 tons, the biggest increase since March 22, according to the LME's daily report.
Among other LME-traded metals, aluminum fell $20 to $2,679, lead declined $52 to $2,273 and tin dropped $100 to $13,875 a ton.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net or
Last Updated: June 13, 2007 07:36 EDT