Nickel Rises, Snapping 2 Days of Losses, as Demand Beats Output
By Chanyaporn Chanjaroen
Dec. 13 (Bloomberg) -- Nickel gained in London, snapping two straight days of losses, as consumers bought the metal used in stainless steel amid forecasts of a production shortfall.
Use will exceed output by 57,000 metric tons this year and in 2007, BHP Billiton Ltd., the world's largest mining company, said Dec. 11. Supply has dropped after Eramet SA, operator of the world's largest ferronickel smelter, cut output in September due to a strike on the Pacific island of New Caledonia.
Nickel for delivery in three months on the London Metal Exchange gained $500, or 1.5 percent, to $33,300 a ton as of 12:12 p.m. local time. The metal dropped 3.5 percent to $32,800 yesterday, its biggest one-day decline in more than four weeks.
``Demand for nickel remains quite strong and consumers were buying at prices below $33,000,'' David Thurtell, a London-based analyst at BNP Paribas in London, said by phone.
The metal has more than doubled this year and traded at a record $34,501 on Dec. 5 amid supply disruptions. Paris-based Eramet has lost 50 tons of metal a day since miners in New Caledonia started their protest on Sept. 25 to demand more benefits. The situation hasn't improved, Eramet spokesman Phillippe Joly said yesterday by phone from Paris.
Supplies will be reduced further when Melbourne-based BHP Billiton shuts its Kwinana nickel refinery in Australia for 21 days in the first quarter of 2007. The plant's output will drop to around 60,000 tons in 2007, from 62,000 tons this year, the company said yesterday.
`Tight Market'
``The market is very tight and the tightness will be larger next year,'' said William van't Wout, the founder of Fondel International BV, a Rotterdam-based metals trading company.
Fondel is the European sales agent for Cubaniquel, the Cuban state-owned nickel producer. Cubaniquel may cut supply to Europe by at least 50 percent next year, Van't Wout said today in an interview from Rotterdam. Fondel will receive about 18,000 tons of the metal from Cubaniquel this year, he said.
Copper dropped on the LME as stockpiles of the metal used in wires and pipes continued to climb. Inventory tracked by the LME gained 2.8 percent to 171,300 tons, the exchange said today. That's the highest since April 2004.
``Further stock increases are expected given seasonally slack conditions,'' Robin Bhar, a London-based metals analyst at UBS Ltd., said in a report.
Copper fell $99, or 1.5 percent, to $6,751 a ton, the lowest intraday price since Nov. 17.
Among other LME-traded metals, aluminum gained $7 to $2,814 lead lost $50 to $1,680, and tin advanced $75 to $10,900. Zinc declined $30 to $4,350.
