Nickel Falls From Six-Week High as Supplies Viewed as Sufficient

Jul 04, 2014 8:31 am ET

July 4 (Bloomberg) -- Nickel fell from a six-week high in London amid speculation supply of the metal is ample for now, easing concern about a potential shortage after Indonesia barred exports of raw ores in January.

Production of nickel will exceed demand by 50,000 metric tons this year before a deficit in 2015, BNP Paribas SA estimates. Prices surged as much as 56 percent in 2014 and are still up 40 percent. Indonesia, the world’s largest nickel- mining nation, will hold a presidential election on July 9.

“For now, there is still a small surplus,” Nic Brown, head of commodity research at Natixis in London, said by e-mail. “There is no indication that either candidate would reverse the current export ban on unprocessed raw materials,” he said of the ballot.

Nickel for delivery in three months slid 2 percent to $19,472 a ton at 1:23 p.m. on the London Metal Exchange after reaching $19,990 yesterday, the highest since May 20. The number of futures contracts outstanding is near a 12-week low reached last month after climbing to a record on May 13, the same day nickel touched this year’s high.

“I would still argue that the nickel price is too high and that some investors are taking profits,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said by e-mail. “The up move was driven by speculation to a large extent.”

Copper for delivery in three months lost 0.4 percent to $7,144 a ton on the LME. Futures for delivery in September fell 0.4 percent to $3.2675 a pound on the Comex in New York, where floor trading is shut today for the Independence Day holiday.

U.S. employers added 288,000 jobs last month, more than estimated by economists in a Bloomberg survey, government figures showed yesterday. Chinese manufacturing expanded at this year’s fastest pace in June, official data showed July 1.

“Base-metal prices are benefiting from the perceived improvement in the U.S. and Chinese economies,” said Brown at Natixis. The nations are the world’s two biggest copper users.

Copper stockpiles monitored by the LME fell 0.4 percent to 156,500 tons, paring the first weekly increase in 14. Nickel inventories slipped 0.1 percent to 304,536 tons.

LME aluminum, lead and tin slid. Zinc was little changed.