Bloomberg Nickel Drops for a Fourth Day on Speculation Demand Will Weaken

Feb. 12 (Bloomberg) -- Nickel declined for a fourth day in London on speculation demand will deteriorate as stainless-steel makers run down inventories of the metal until economic growth revives. Copper and aluminum also retreated.

Nickel has dropped 12 percent this year, more than any other metal except steel on the London Metal Exchange. Demand for nickel will fall 15 percent this quarter from a year earlier and 10 percent in the next quarter, Barclays Capital forecast. Posco, Asia’s biggest stainless-steel maker, cut prices last week for the first time since August in an effort to spur demand.

“We are clearly anxious over the coming quarters, and the market is remaining quite weak,” said Philippe Smits, managing director of stainless-steel warehouse company Contisteel NV/SA in Belgium. “I’m not getting signs things are improving.”

Nickel for three-month delivery fell $105, or 1 percent, to $10,300 a metric ton at 5:03 p.m. on the LME, erasing a gain of as much as 1.1 percent. Prices have slid 10 percent this week. Inventories in Belgian and Dutch Contisteel warehouses that hold stainless steel are down 50 percent since last year, Smits said.

“Due to the present economic situation, we are not prepared to build up any” stockpiles, he said.

Metals also fell after the European Union’s statistics office said European industrial production slid 12 percent from a year earlier in December, speeding up from November’s 8.4 percent decline. The latest drop was the biggest since at least 1986.

‘Difficult’ Demand

“Very difficult” demand conditions for commodities will continue into next year, Tom Albanese, chief executive officer of mining company Rio Tinto Group, said today. Nickel demand will fall 25,000 tons short of production this year, Barclays forecast last week. Stainless steel accounts for 64 percent of use, according to Citigroup Inc.

Nickel inventories in LME-monitored warehouses jumped 576 tons to 88,728 tons, the most since June 27, 1995, the exchange said today. Some 75 percent of the total is held in warehouses in Rotterdam. LME warehouses are buyers of last resort. more...