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London nickel futures dropped to their lowest in nearly a month on Wednesday and those in Shanghai slid 5 per cent amid abundant supply that could keep prices under pressure.
Nickel inventories at London Metal Exchange warehouses jumped to a record high of 444,936 tonnes, reflecting sluggish global demand and dashing expectations that the market would face shortages after Indonesia banned unprocessed ore exports last year.
“Without support from the demand side, nickel prices will fall further,’’ said Peter Peng, analyst at CRU Group in Beijing.
LME nickel
Three-month nickel on the London Metal Exchange was down 2.2 per cent at $12,805 a tonne by 0213 GMT, off a session low of $12,785, its weakest since April 24. The metal slid 4.8 per cent on Tuesday in its steepest fall since September.
Nickel for July delivery on the Shanghai Futures Exchange slumped 5 per cent to hit its exchange-set downside limit of 102,340 yuan ($16,492) a tonne.
“If the price drops below 100,000 yuan per tonne, small Chinese producers will be under pressure,’’ said Peng.
Nickel surplus
The global nickel surplus fell to 100 tonnes in March from 10,600 tonnes a year ago and a revised 18,700 tonnes last month, the International Nickel Study Group had said on Tuesday. The March figure was the lowest surplus since the market slipped to a deficit of 2,300 tonnes in April 2014.
A stronger dollar also weighed on base metals, making assets priced in the greenback costlier for buyers using other currencies.
LME copper, tin
LME copper was up 0.3 per cent at $6,238 a tonne, but not far off a near three-week low of $6,207.50 reached overnight. Shanghai July copper dropped 1.9 per cent to 44,930 yuan a tonne.
LME tin fell 1.3 per cent to $15,800 a tonne and its Shanghai counterpart tumbled 2.5 per cent to 115,990 yuan per tonne.
The losses in base metals this month follow strong gains for most in April, with analysts suggesting weak fundamentals could push prices lower.
“The question at this point is whether the gains that many metals have managed to cobble together over the course of April will be rolled back in their entirety going into the balance of May and heading into the seasonally weak June and July time periods,’’ NTL FCStone analyst Edward Meir said in a note.
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