Nickel Extends Decline From 12-Month Low as Surplus Seen WiderJarrett Banks
Nickel fell for a second day, extending declines from the lowest close in a year, as data showed the metal’s global oversupply widened.
Nickel was in a surplus of 12,700 metric tons in December, widening from 6,500 tons the previous month, according to International Nickel Study Group data released Friday. Supply outpaced demand last year by 94,300 tons, down 47 percent from a surplus of 178,000 tons in 2013. Goldman Sachs Group Inc. and Australia & New Zealand Banking Group Ltd. forecast prices will rise later this year once the market falls into deficit as global ore supplies tighten as a result of Indonesia’s ban last year on unprocessed minerals.
“In the shorter term, it certainly will be perceived as a bearish signal,” said Daniel Hynes, a senior commodity strategist at ANZ. The widening surplus “probably delays people’s expectations of when the market will tighten up.”
Nickel for delivery in three months on the London Metal Exchange fell 0.3 percent to $13,940 a ton at 4:26 p.m. in Tokyo. Prices dropped 1.9 percent on Thursday to close at $13,985 a ton, the lowest since Feb. 6, 2014. The metal is heading for the biggest weekly decline in two months.
The market is tightening further up the supply chain in China, where ore inventories are declining and the output of nickel pig iron, a cheaper alternative to the refined metal, is falling, Hynes said.
“We’re not really expecting a tightness to show up until later this year,” Hynes said.
Copper in London lost 0.4 percent to $5,727.50 a ton ($2.60 a pound). In New York, futures for May delivery slid 0.5 percent to $2.6035 a pound. Markets in China, the world’s biggest metal user, are shut through Feb. 24 for the Lunar New Year.
On the LME, aluminum and lead were little changed while zinc and tin rose.