November 28, 2017 / 11:58 AM / 2 years ago

METALS-Deteriorating fundamentals send nickel to six-week low

* LME/ShFE arb:

* Nickel demand from China’s stainless mills seen weaker

* Indonesian supplies expected to ramp up (Adds closing prices)

By Pratima Desai

LONDON, Nov 28 (Reuters) - Nickel prices hit their lowest level in more than six weeks on Tuesday as the market fretted about weaker demand in top consumer China and rising supplies from major producer Indonesia.

Benchmark nickel on the London Metal Exchange ended down 1.9 percent at $11,350 a tonne. In earlier trading the metal used mostly in stainless steel fell to $11,255, its lowest since Oct. 12.

“We do see China demand coming off and more material coming out of Indonesia. That will prevent prices moving up from here,” said Cru Group consultant Mark Beveridge.

INDONESIA: The gradual lifting of Indonesia’s ban on raw material exports, imposed in early 2014, has seen more nickel ore make its way to world markets, particularly to China.

ANTAM: The latest news of higher supplies from Indonesia comes from state-owned diversified miner PT Aneka Tambang Tbk (Antam), aiming to boost sales of nickel ore by more than 160 percent next year to 11 million tonnes, from an estimated 4.2 million tonnes this year.

AUTOS: Nickel prices soared to a two-year peak at $13,030 on Nov. 1 in a rally triggered partly by expectations of demand to make rechargeable batteries for electric vehicles.

EV DEMAND: Nickel demand from battery makers is expected to rise only gradually in the coming years. Last year it accounted for 40,000 tonnes in a market estimated at 2 million tonnes.

STOCKS: Nickel stocks MNISTX-TOTAL near 380,000 tonnes have more than doubled from less than 140,000 tonnes in December 2012.

BRIQUETTES: About 75 percent of those stocks are bagged briquette, easily crushed into small particles and dissolved in sulphuric acid to make nickel sulphate used in batteries.

CONSUMPTION: China accounts for about half of global nickel consumption, most of it for use by stainless steel mills.

FUTURE DEMAND: Analysts expect weaker demand from China’s stainless steel mills after a period of restocking.

POSITIONING: Funds’ net long nickel position on the LME — at about 30,000 lots, or 180,000 tonnes — has fallen by a quarter since Nov. 1, when it rose above 40,000 lots.

DEFICIT: Latest data from the International Nickel Study Group showed the global nickel market deficit narrowed slightly to 6,100 tonnes in September from a revised 6,300 tonnes in August.

SUPPORT: Nickel prices have been supported by the idea that miners are reluctant to invest in new capacity. “Nickel miners are unlikely to boost investment as long as prices remain below $15,000 a tonne,” BofAML analysts said in a recent note.

ELSEWHERE: Copper slipped two percent to $6,805, aluminium fell 1.5 percent to $2,102.5, zinc lost 0.9 percent to $3,158, lead ceded 1.5 percent to $2,427 and tin was down 0.1 percent at $19,550.

Editing by David Evans, Greg Mahlich

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