Feb. 22 (Bloomberg) -- Nickel rose in London, trimming the biggest weekly drop since 2011, on speculation yesterday’s slump drew buying by China, the world’s largest consumer of the metal.
Nickel’s 14-day relative strength index, a gauge of whether a commodity is overbought or oversold, yesterday almost fell below the level of 30 that indicates a potential impending rebound to some analysts who study technical charts. Chinese buyers were active as prices retreated on the London Metal Exchange, according to RBC Capital Markets Ltd.
“We’ve seen a little bit of liquidation this week, especially some momentum funds that have changed their tactic from bullish to bearish,” Hedwig Schmidt, head of sales at Trialed Metals Ltd. in London, said by phone. The metals “industry has been buying on the way down. We even saw some Chinese buying on the way down.”
Nickel for delivery in three months added 1 percent to $16,800 a metric ton by 2 p.m. on the LME. The weekly drop of 8.6 percent would be the biggest since the week ended Sept. 23, 2011. Copper slipped 0.1 percent to $7,855 a ton in London and the metal for delivery in May rose 0.1 percent to $3.5725 a pound on the Comex in New York.
Metals pared or erased gains after the European Union said the euro-area economy will shrink in back-to-back years for the first time. The dollar’s seventh climb in eight against the euro curbed commodities’ appeal as an alternative investment.
Comex copper trading was 120 percent above the average of the past 100 days for this time of day, data compiled by Bloomberg showed. Tin added as much as 2.3 percent in London, the most since Jan. 30, and lead rose. Aluminum and zinc fell.
Nickel, used to make stainless steel, closed yesterday below the 200-day moving average at about $16,917 a ton. That “will inevitably bring further technical sellers to the market in the coming days,” RBC said in a report yesterday.
Inventories of the metal tracked by the LME are up 10 percent this year to 154,500 tons, the highest since April 2010, according to daily exchange figures. Nickel is down 1.6 percent in 2013, the worst performance among the LME’s six main metals.
LME copper stockpiles, up 33 percent this year, advanced for a seventh session to 424,350 tons.
--Editors: Dan Weeks, Claudia Carpenter.