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Gold/Mining/Energy : Inco-Voisey Bay Nickel [ T.N.V] -- Ignore unavailable to you. Want to Upgrade?

To: Bob Fairchild who wrote (267)	6/26/1998 1:08:00 PM
From: Heretic	Read Replies (1) \| Respond to of 1615

LME urged to act over nickel - Kreissel LONDON, June 23 (Reuters) - London Metal Exchange (LME) directors should look at the ''artificial factors'' affecting the nickel market, so that the LME can regain its original status as a hedging instrument for producers and consumers, officials of Kreissel Metal Recycling (KMR) said. In an open letter to trade publication Metal Bulletin, KMR Managing Director Gunter Kreissel and Tobias Kammer, also part of KMR management, said that commodities are becoming increasingly subject to influences other than the supply/demand fundamentals. ''...institutional investors, such as hedge funds, are adding LME nickel contracts to their portfolios.'' Besides generating speculative income, a main ingredient within a strategy of diversification is generating income from the contango. ''Hedge funds are using their 'muscle' (large volumes in a basically illiquid market) to reach the desired price target,'' KMR said. Nickel producer Canada's Inco Ltd (N.TO - news) has seen its share price eroded in an overall booming stock market. Meanwhile, other market participants within stainless steel production, as well as in the trade of primary and secondary metals, are seriously threatened by these extreme market conditions. ''The present situation, in our opinion, is detrimental to the actual function of the LME; it is in the process of degenerating from a hedge instrument for producers and consumers into a market accommodating the strategies of institutional investors.'' KMR said additional liquidity could be provided by the LME introducing a new nickel contract for uncut cathodes. Also, an obligation to publicise open positions would force hedge funds to reveal their hands on the LME. ''It raises the question of to what extent the LME Board, in its present form, represents the interests of the market,'' KMR said.