Nickel Rises to Record for Second Day as Stockpiles Decline
By Chanyaporn Chanjaroen
March 13 (Bloomberg) -- Nickel rose to a record in London for a second consecutive day as stockpiles dropped, exacerbating a shortage of the metal used to make stainless steel. Lead declined a day after posting the largest gain since 1990.
Inventories of nickel monitored by the London Metal Exchange shrank 1.8 percent to 3,876 metric tons, the LME said today in a daily report. That's enough for less than two days of global consumption. Demand will outpace production by 13,000 tons this year, Canaccord Adams said today in a report.
``The tightness remains a factor driving nickel prices higher,'' Peter Fertig, a commodity analyst at Dresdner Kleinwort in Frankfurt, said in an e-mailed report.
Nickel for delivery in three months on the LME gained $300, or 0.7 percent, to $44,100 a ton as of 12:42 p.m. in London. Earlier, it traded at $44,750, beating yesterday's record by $750.
``Extremely high'' nickel prices are curbing consumption and encouraging more production, Canaccord analysts Orest Wowkodaw and Gary Lampard in Toronto said in the report. Still, a 7 percent production increase expected this year won't be enough to plug the supply gap, they said.
Nickel's 14-day relative strength index, a technical indicator used by traders to predict gains and declines in prices, was at 68.91 today. A reading above 70 usually signals prices are poised to drop.
Lead fell as much as $50, or 2.6 percent, to $1,865 a ton. The metal rose 8.1 percent yesterday after Canada's Ivernia Inc. said its shipments from Australia were suspended as the government investigated the death of birds from lead poisoning.
The company's Magellan mine is expected to produce 85,000 tons of lead this year, or about 2.5 percent of global mine output.
``The story doesn't affect the production at the mine itself,'' said Neil Hawkes, a lead analyst at London-based metals consulting company CRU.
Copper Supply
Copper gained for a second consecutive day, rising $35, or 0.6 percent, to $6,300 a ton.
Copper supply ``remains vulnerable to declining grades and other constraints including equipment availability, labor shortages and power and water supplies,'' London-based Antofagasta Plc said today in a statement that accompanied its full-year results.
Copper concentrate, the raw material smelted to metal, will be in a supply shortfall through 2008, Antofagasta said.
LME-tracked inventories of copper fell for a third consecutive day, dropping 0.7 percent, to 199,725 tons, the lowest since Jan. 24. The reduced supply on the exchange created a shortage known as backwardation, when metal for nearby contracts become more expensive than longer-dated ones.
Copper for immediate delivery traded at $23 a ton higher than the benchmark contract today, up from $6 a ton yesterday.
Tin stockpiles monitored by the LME fell 650 tons, or 6.4 percent, to 9,440 tons, the lowest since Nov. 11, 2005. Tin on the LME was unchanged at $13,700 a ton.
Also on the LME, aluminum dropped $13 to $2,760 a ton, and zinc added $15 to $3,305.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at
Last Updated: March 13, 2007 08:48 EDT
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