Nickel Trades Near 12-Year Closing Low as Chinese Demand Slows

  • Prices heading for biggest annual slump since global crisis
  • Commodities have spiraled lower as China's economy weakens

Nickel traded near the lowest close in more than a decade amid slowing stainless-steel production in China as Asia’s largest economy faces the weakest growth in a generation.

Chinese output of stainless steel found in everything from washing machines to window frames slumped for four straight months through September to the lowest since February. Production was down 11 percent from May, data from Antaike Information Development Co. show.

Nickel is the worst performing metal on the London Metal Exchange this year, plunging 41 percent, the biggest annual decline since the global financial crisis. The metal traded at $8,990 a metric ton on Thursday, near its $8,980 close, the lowest since August 2003. A slowdown in China has pummeled commodities, sending the Bloomberg gauge of 22 raw materials to the lowest since 1999.

President Xi Jinping is steering Asia’s largest economy away from state investment to a model driven by consumer demand and services, hurting prices of everything from iron ore to copper. Nickel supply will exceed demand by 26,000 tons this year as China falters, according to Sumitomo Metal Mining Co.

Record Price

“The China market is much better supplied than anyone expected,” John Davies, head of commodities research at BMI Research, said in an interview in Singapore. “Nickel demand is mostly from the steel sector and steel production has been weak. That’s helping keep the market much better supplied.”

Prices reached a record $51,800 in May 2007 as supply couldn’t match demand from China. Nickel has since plunged as slower growth damped demand and the country boosted nickel pig iron output, an alternative to the refined metal.

Indonesia supplied much of China’s ore needs for the production of nickel pig iron until the country banned exports in January 2014 to encourage domestic processing. The nation may have six smelters starting operations this year and three more in 2016, according to Bambang Gatot Ariyono, director-general of minerals and coal at the Energy and Mineral Resources Ministry.

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