Nickel up $1.27 a lb
Nickel Rises to a Record for Fourth Day as Stockpiles Plunge
By Brett Foley
March 15 (Bloomberg) -- Nickel rose to a record for a fourth consecutive day in London as stockpiles of the metal used in stainless steel plunged, increasing speculation that supply won't meet demand. Copper advanced to the highest in more than two months.
Nickel inventories monitored by the London Metal Exchange fell 5.8 percent to 3,594 tons, the exchange said in a daily report. That's less than two days of global consumption. Stockpiles have slumped 45 percent this year on surging Chinese demand for stainless steel.
``Supply has just not caught up with demand, particularly for stainless steel in Asia, and there is little prospect of that changing in the near future,'' Kevin Norrish, an analyst with Barclays Capital in London, said today by phone.
Nickel for delivery in three months on the LME gained $1,400, or 3.1 percent, to $45,200 a metric ton as of 11:45 a.m. in London. Earlier, the contract traded at $46,300, beating yesterday's record by $1,300.
The metal has jumped more than sixfold in the past five years as supply failed to keep up with demand. China overtook Japan as the world's largest producer of stainless steel last year. China's stainless-steel production soared 68 percent in 2006, the Xinhua News Agency reported last month.
Shipments of nickel laterite ore from the Philippines more than doubled in February from a year ago as producers sought to capitalize on high prices, according to a Bureau of Customs report today. The Philippines is the main supplier of the ore which has a lower content of nickel and is more costly to process. It can be used as a substitute for higher grades in some products.
Copper Production
Copper gained $220, or 3.5 percent, to $6,440 a ton, the highest since Dec. 20. LME-monitored stockpiles of the metal used in pipes and wires fell for fifth consecutive day by 0.8 percent to 196,125 tons, the lowest since Jan. 23.
Kazakhmys Plc, Kazakhstan's biggest copper producer, said demand for industrial metals will stay above historical averages this year, buoyed by economic growth in China and India. ``Supply and demand fundamentals suggest continued price strength,'' Chairman Vladimir Kim said today in a statement.
Copper for immediate delivery on the LME traded $70 a ton higher than the benchmark three-month contract. This is a situation known as backwardation, where cash prices are higher than three-month futures, indicating a shortage of supplies.
The backwardation is ``likely to get wider'' causing increased volatility in the price, Alex Heath, who heads the base-metals trading team at RBC Capital Markets in London, said today in a report.
Indonesia, the world's second-largest tin producer, said it will maintain a lower output of 90,000 metric tons a year to prevent price ``instability,'' industry organization ITRI Ltd. said. Output will fall 28 percent this year from 125,000 tons in 2006 after the government put curbs on illegal miners, the St. Albans, England-based group said today in a statement.
Tin jumped $400, or 3 percent, to $13,900 a ton, close to its 17-year high of $13,975 recorded on Feb. 22.
Zinc consumption dropped 2.5 percent in January from a year earlier, while production of the metal used to galvanize steel increased 6.6 percent, the Lisbon-based International Lead and Zinc Study Group said today on its Web site. Lead output rose to 693,000 tons, from 662,000 tons while consumption increased to 679,000 tons, from 639,000 tons.
Zinc advanced $100 to $3,320 a ton and lead gained $40 or $1,915.
Also on the LME, aluminum rose $60 to $2,775 a ton.
To contact the reporter on this story: Brett Foley in London at bfoley8@bloomberg.net .
Last Updated: March 15, 2007 08:09 EDT
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