Nickel Can't Hold Weekly Surge as Supply Cuts Seen Not Enough

  • Prices had reached lowest in 12 years earlier this month
  • JPMorgan recommends investors sell the metal amid surplus

Nickel failed to sustain the biggest weekly rally since October as speculation mounts that supply cuts still aren’t enough to erode a surplus.

Prices slumped to a 12-year low on Jan. 16, and production is unprofitable at more than two-thirds of mines around the world. While there have been announcements of output cuts and risks to supply in Australia and Brazil, JPMorgan Chase & Co. expects a glut of 56,000 metric tons this year and recommends selling the metal short, it said in a report e-mailed Monday.

“Sentiment among speculative financial investors still remains very pessimistic,” Commerzbank AG analysts including Daniel Briesemann wrote in a note Monday. “This is still clearly preventing any more pronounced price recovery at present.”

Nickel for delivery in three months fell 1.7 percent to settle at $8,550 a metric ton at 5:50 p.m. on the London Metal Exchange. The metal gained 3.6 percent last week, even as combined inventories tracked by exchanges in London and Shanghai reached the highest since at least April.

A 56,000-ton surplus would equal less than two week’s worth of global demand, according to Morgan Stanley estimates.

  • Copper fell 0.6 percent to $4,417 a ton ($2 a pound) on the LME. Aluminum, lead and tin declined, while zinc gained.
  • Copper futures for March delivery slid 0.2 percent to $1.998 a pound on the Comex in New York.
  • Sluggish demand, along with rising risks in both developed markets and China, make it likely that copper will drop to fresh lows this year, Dane Davis, an analyst at Barclays Plc, said in a note e-mailed Monday.
  • The FTSE 350 Mining Index decreased 0.8 percent. Rio Tinto Plc led declines, falling 2.7 percent.
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