Nickel steadies near week lows, at risk of more losses on weak China demand

MELBOURNE — London nickel steadied on Monday after posting its largest daily loss in two months in the session before, but prices were seen tailing off ahead of the Lunar New Year next week.

“Aside from the strengthening dollar, we think concerns about China’s weak demand ( have) also weighed on the nickel price,” said broker Argonaut Securities in a report.

Some of China’s stainless steel mills, the major consumers of nickel, are losing money at current prices and have already wound down their operations, it said.

“Looking into February, a week long Chinese Lunar New Year will further dampen production and demand. More steel plants are expected to arrange care and maintenance therefore production of stainless steel is expected to contract further,” it said.

“We expect to see price weakness in nickel going forward.”

London Metal Exchange (LME) nickel slipped 0.30%, adding to Friday’s 4% plunge that was also fanned by expectations of a glut due to growing nickel ore exports from Indonesia. Shanghai Futures Exchange nickel was down 2.5%.

LME copper firmed by 0.50% amid a flat to lower complex. It traded at $ 7,079 a ton by 0543 GMT. Prices dropped by 1% on Friday when they hit the highest in a week at $7,188.50 before falling into the close.

On the Shanghai Futures Exchange where prices have trended lower since late December, copper stayed down by 0.50% at 52,950 yuan ($8,407) a ton.

US job growth surged in January and wages increased further, recording their largest annual gain in more than eight- and- a- half years, bolstering expectations that inflation will push higher this year as the labor market hits full employment.

Higher supply overhung the market after Peru, the world’s no. 2 copper and zinc producer, reported a boost in production. Copper output grew 3.9% to 2.4 million tons and zinc production surged 10.2% to 1.5 million tons.

Lead prices took a breather from a six-and-a-half-year top of $2,685 from Friday to tail back by 1%.

Russian aluminum maker Rusal said that China’s winter capacity cuts will curb output by one million tons annually.

Hedge funds and money managers cut their net long position in COMEX copper in the week to Jan. 30, US Commodity Futures Trading Commission data showed.

Asian share markets stumbled on Monday as fears of resurgent inflation battered bonds, toppled Wall Street from record highs and sparked speculation central banks globally might be forced to tighten more aggressively. —