May 20, 2015 / 10:25 AM / 5 years ago

METALS-Nickel recovers after hitting month low on record stocks

* LME nickel inventories at record high, dollar firms

* Zinc dips after large stocks inflow

* Coming up: minutes of FOMC April meeting at 1800 GMT (Adds closing prices, details)

By Maytaal Angel

LONDON, May 20 (Reuters) - Nickel recovered to end slightly firmer on Wednesday after falling to its lowest in nearly a month as London Metal Exchange stocks hit another record and demand from China’s stainless steel sector remained lacklustre.

LME warehouse stocks of the metal MNI-STOCKS jumped to a record 446,640 tonnes, reflecting sluggish global demand while supply has proved resilient to a ban on nickel ore exports from Indonesia, formerly the world’s top exporter.

“We need to see nickel ore prices ticking up in China, that’s what traders and funds are looking for,” Macquarie metals analyst Vivienne Lloyd said.

“You are beginning to see nickel pig iron production coming down and a stabilisation in ore prices, if not a lift, but we need stronger signals that raw material constraints have arrived.”

Three-month nickel on the LME ended up 0.2 percent at $13,110 a tonne, having earlier hit its lowest since April 24 at $12,785. The metal slid 4.8 percent on Tuesday, its steepest fall since September.

China’s stainless steel demand has been constrained by a dull economy that is forecast to grow at its slowest in 25 years. The primary use for nickel is in the manufacture of stainless steel.

Commerzbank said speculators had likely withdrawn further from nickel, hurting prices. “According to the LME’s statistics, they slashed their net long positions by 40 percent last week.”

Falls in nickel were limited, however, by Tuesday’s industry data showing the global nickel surplus fell to 100 tonnes in March from a revised 18,700 tonnes last month.

LME zinc ended down 1.26 percent at $2,200 a tonne, having earlier hit its lowest in nearly a month at $2,193, weighed down by LME data MZN-STOCKS showing a 36,375 tonne inflow of zinc stocks into warehouses.

“There’s a lot of metal around and, while demand is robust, there has not been a jump in requirements; so with spreads tightening (last week), it made it hard to hold material,” Macquarie’s Lloyd said.

A stronger dollar also weighed on base metals, raising costs for buyers using other currencies.

LME copper ended flat at $6,220 a tonne, having earlier hit a three-week low of $6,194.

LME tin ended up 0.6 percent at $16,100 a tonne, having gained on Tuesday after Indonesia, the world’s top producer of refined tin, announced tighter export rules.

Aluminium ended down 0.4 percent at $1,783 a tonne, having earlier hit its lowest in nearly a month at $1,780, while lead ended down 0.4 percent at $1,930 a tonne, having earlier hit its lowest since April 8 at $1,915.


Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin ($1 = 6.2056 Chinese yuan) (Additional reporting by Manolo Serapio Jr.; Editing by David Goodman and David Evans)

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