Nickel Declines to Three-Month Low on Signs of Slowing Demand
By Chanyaporn Chanjaroen
June 12 (Bloomberg) -- Nickel fell to the lowest in more than three months in
London on signs that demand for the metal used in stainless steel probably
slowed while supply increased.
Orders for the metal to be withdrawn from London Metal Exchange-monitored
stockpiles dropped 8.6 percent to 444 metric tons, exchange data, known as
canceled warrants, showed today. That brought the decline this month to 32
percent. Nickel inventory has jumped 90 percent so far in June.
Prices probably will drop further as supplies grow, said Andrew Silver, a
trader at Natixis Commodity Markets Ltd., one of 11 companies trading on the
floor of the LME. ``Current prices are still too high,'' he said in an
interview.
Nickel for delivery in three months on the LME fell $2,500, or 5.9 percent,
to $40,000 a ton as of 4:35 p.m. local time. Earlier it dropped as much as
$2,700 to $39,800, the lowest intraday 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.
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 in a range of 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 between
50 percent to 79 percent, and another in a range of 30 percent and 39 percent.
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