Shanghai - Nickel in London extended declines after the biggest two-day drop in seven weeks as rising inventories signal ample supply. The metal in Shanghai fell by its daily limit.
Nickel in London dropped as much as 2.3 percent after slumping 6.4 percent in the previous two days, the biggest such slide since March 31. Stockpiles in London Metal Exchange-tracked warehouses rose to a record 444 936 metric tons, according to bourse data. Inventories available for withdrawal from Shanghai Futures Exchange, known as on-warrant, rose on Tuesday to 1 553 tons.
“The fundamentals of nickel are under heavy pressure as stainless steel demand from China, the largest user, hasn’t yet picked up this year while inventories rise,” said Hu Ziqi, a Shanghai-based analyst at BOC International Futures.
China’s stainless steel production in the first quarter of the year fell 4.5 percent from the previous year, Beijing Antaike Information Development Company, a Chinese state-owned researcher, said last month. Stainless steel accounts for 85 percent of the country’s nickel demand, according to Standard Chartered PLC.
Nickel for delivery in three months on the LME fell 0.4 percent to $13,035 a ton at 3:07 p.m. in Shanghai. The metal in Shanghai fell 3.8 percent to close at 102,340 yuan ($16,493) a ton.
The greenback posted the biggest two-day gain since December 2011 against a basket of 10 currencies on Tuesday. The dollar is rebounding from a four-month low after a surge in US housing data fuelled speculation over higher interest rates before the release of minutes from the Federal Reserve’s April meeting.
Copper was little changed at $6,224.50 a ton ($2.82 a pound) in London. On the Comex in New York, futures for July delivery fell 0.1 percent to $2.834 a pound, while the contract in Shanghai fell 2.1 percent to close at 44,760 yuan a ton.
The LME index of six metals tumbled 2.4 percent on Tuesday to 2,818.8, the biggest drop since January 23. The gauge has dropped 6.1 percent from a 20-week high on May 5.
Bloomberg