Nickel, this year’s best performer on the London Metal Exchange, fell for a third day to the lowest price in almost 10 weeks as the dollar strengthened on concern that Greece’s debt crisis might spread.
The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, rose for a fourth day to a one-year high, climbing as much as 0.5 percent. Concern about the potential effect of the Greek crisis on other euro-zone economies has helped to pull the single European currency down 11 percent against the dollar this year.
“It’s all about Europe and the euro,” Leon Westgate, a Standard Bank Plc analyst in London, said by phone. “You have the uncertainty over the credit crisis in southern Europe and if that is going to spread to Spain, Portugal.”
Nickel for delivery in three months dropped as much as $1,475, or 6.7 percent, to $20,450 a metric ton, the lowest intraday price since Feb. 26, on the LME. The contract was down 2.6 percent at $21,350 at 8:51 a.m. local time, paring this year’s gain to 15 percent.
Advances by the dollar make metals priced in the currency more expensive in terms of other monies.
Yesterday the metal fell as much as 16 percent, the most in intraday terms since October 2008. Three-month nickel had climbed as much as 43 percent this year on signs of revived output of stainless steel, the main source of demand.
“The price was overdone,” Westgate said. “This year’s rally was driven by technical buying.”
Demand for refined metal might slow this year because of surging Chinese production of nickel pig iron, a less expensive alternative, according to Westgate. That may pull prices below $20,000 a ton, presenting a “buying opportunity,” he said.
Talvivaara Mining Co., a Finnish nickel producer, cut its goal for output because of technical issues at a metals recovery plant. Production will come to between 15,000 and 25,000 tons of nickel this year, the company said today in a statement.