Nickel Drops in London on Demand Speculation; Copper, Zinc Fall
By Chanyaporn Chanjaroen and Brett Foley
June 19 (Bloomberg) -- Nickel declined in London for a second consecutive day on speculation stainless-steel makers will continue to cut usage after an earlier price rally. Copper and zinc also fell.
Nickel's 19 percent gain this year has made the market ``overheated,'' analysts including Tobias Merath at Credit Suisse Group in Zurich said. Such increases have reduced usage among stainless-steel producers, which account for two-thirds of consumption worldwide, Merath said today in a phone interview.
``Prices will fall to around $36,000, $37,000 in the next three months,'' Merath said. ``Nickel has been overheated since the beginning of this year.''
Nickel for delivery in three months on the London Metal Exchange dropped $1,175, or 2.9 percent, to $39,225 a ton as of 12:55 p.m. local time. The contract fell 4.3 percent yesterday, the largest drop in four days. It traded at $38,900 on June 14, the lowest since Feb. 22.
A drop in usage at companies including Outokumpu Oyj, the world's third-largest alloy producer, has helped push down the price 20 percent from a record $51,800 a ton on May 9. The metal will move into a ``significant'' surplus next year, after supply is expected to meet demand this year, Goldman Sachs JBWere Pty, the Australian affiliate of the world's biggest securities firm, said June 14.
Reduced consumption created a 40 percent increase in stockpiles this year. Inventories monitored by the LME dropped 12 tons to 9,276 tons, the exchange said today in a daily report.
Paul Litman: "Avoid panic selling & avoid overconfident buying."
AI
