Nickel Drops on 2014 Supply Outlook as Price Volatility Climbs

May 20, 2014 2:51 pm ET

May 20 (Bloomberg) -- Nickel declined on speculation that current global supplies are adequate, while a measure of price volatility rose to a 23-month high.

The market will be in surplus by 24,000 metric tons in 2014, according to OAO GMK Norilsk Nickel, the world’s top producer of refined metal, and inventories tracked by the London Metal Exchange have climbed 6.7 percent this year. The 60-day historical volatility rose to 30.2, the highest since June 2012, after prices yesterday jumped the most in 20 months.

“Led by nickel, the metals complex has lost some outright steam as projections of overall surpluses return to the fore,” Michael Turek, a director at Newedge USA LLC in New York, said in an e-mail.

Nickel for delivery in three months dropped 1.2 percent to $19,855 a ton at 7:49 p.m. on the LME. Yesterday, the price surged 5.7 percent, the most since Sept. 14, 2012. In the two days ended May 15, the metal plunged 11 percent, the biggest drop since Sept. 22, 2011.

On May 13, nickel reached $21,625, the highest since February 2012. The price has climbed 43 percent this year after a ban of raw-ore exports in January in Indonesia, the biggest miner.

Global demand may exceed supply as soon as 2015, Moscow- based Norilsk said.

Copper dropped 0.6 percent to $6,885 a ton ($3.12 a pound). Yesterday, the price reached $6,954, the highest since March 7. Inventories tracked by the LME fell for the 20th straight session to 180,825 tons, the lowest since September 2008.

Aluminum, zinc, lead and tin also declined in London.

On the Comex in New York, copper futures for July delivery fell 0.7 percent to settle at $3.145 a pound. The price has dropped 7.4 percent this year.