Nickel Declines Most in Four Months on Signs of China Slowdown

Nickel fell the most in four months in London on concern supply is ample amid signs of weaker economic growth in China, the world’s biggest consumer of the metal. Copper and aluminum retreated.

Retail sales gained at the slowest pace since 2009 during last week’s Lunar New Year festival in China, a Ministry of Commerce statement showed Feb. 15. Nickel, used mostly to make stainless steel, is in “acute oversupply,” Morgan Stanley said today. Inventories of nickel tracked by the London Metal Exchange reached the highest level since 2010 last week. Stockpiles of copper, aluminum, lead and tin gained today.

“The market is down due to retail sales of the holiday week,” Pengjiang “Richard” Fu, director for Asian commodities trading at Newedge Group SA in London, said by e-mail. “Although office people are back to work now, factories won’t resume production until after another week.”

Nickel for delivery in three months slid 2.7 percent to $17,890 a metric ton by 5:27 p.m. on the LME. Prices fell as much as 3.1 percent, the most since Oct. 12, and dropped below the 34-day moving average at about $17,837.

“Nickel took the brunt of Chinese selling” that weighed “heavily on the market,” Mark Newson-Smith, head of sales at XConnect Trading Ltd. in London, said in a report today. Markets in the nation reopened after last week’s Lunar New Year holiday.

New projects are adding nickel production into a market that’s already getting more supplies of Chinese nickel pig iron, a lower-priced substitute for refined metal, Morgan Stanley said in a report. Stockpiles tracked by the LME are up 9.6 percent this year to 153,270 tons, exchange figures showed today.

LME copper fell 1 percent to $8,120 a ton and the contract for delivery in May dropped 1.4 percent to $3.7015 a pound on the Comex in New York, where floor trading is closed today for Presidents’ Day. Lead, zinc, aluminum and tin slid in London.

“I wouldn’t be surprised to see a countermovement tomorrow or in the next few days,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said by e-mail. “These prices are clearly buying opportunities.”

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