Nickel Drops as Citi Sees Philippines Mine Audit ‘Underwhelming’

  • Few signs of nickel ore or metal market tightness: Citigroup
  • Copper prices retreat after rising in the past four weeks

Nickel retreated from its biggest weekly gain in almost three months, as Citigroup Inc. forecast fourth-quarter price declines and said the impact of supply disruptions from the Philippines will probably be “underwhelming.”

The world’s top miner of nickel ore is shutting operations that fall short of environmental or welfare standards. Ten mines have been suspended so far and Environment Secretary Gina Lopez said last week more than 10 additional suppliers face closure. Citigroup said concerns about disruptions are misplaced, according to a report e-mailed Monday.

The metal used in stainless steel dropped as much as 2.3 percent on the London Metal Exchange. It surged 9.6 percent last week, the most since July 1, and has gained 19 percent this year amid concern about Philippine disruptions.

There are “few signs of ore or metal market tightness,” Citigroup analysts including Ed Morse wrote in the note. The bank expects five or six additional mines to be closed by the Philippines, which will be offset by increased ore shipments from the country’s bigger miners and by Indonesia.

Nickel for delivery in three months fell 1.2 percent to settle at $10,530 a metric ton at 5:59 p.m. on the LME. Prices on Friday reached the highest since Aug. 12. Citigroup downgraded its estimate for the fourth quarter by $130 to $9,770, and to $9,550 for next year.

In other industrial metals:

  • Stockpiles of aluminum tracked by the LME fell 0.5 percent on Monday, the most since March. Citigroup called for “caution” on aluminum due to a pick-up in Chinese output.
  • Copper retreated 0.3 percent to $4,841 a ton ($2.20 a pound) in London. Aluminum, zinc, lead and tin gained on the LME.
  • Copper futures for December delivery slid 0.1 percent to $2.1985 a pound on the Comex in New York.

    (An earlier version of this story corrected a misspelling of the country name in the chart.)

— With assistance by Joe Deaux, and Winnie Zhu

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