April 30, 2014 / 9:49 AM / 6 years ago

METALS-Nickel posts biggest monthly gain in 19, copper dips

* Nickel up almost 15 pct in April, more than 30 pct in ytd

* China’s domestic copper market shows signs of tightening

* U.S. Q1 economic growth much lower than expected (Updates with closing prices)

By Harpreet Bhal and Eric Onstad

LONDON, April 30 (Reuters) - Nickel prices rose on Wednesday, posting their biggest monthly gain in 19 months, on tight supplies from Indonesia and concern over sanctions on top refined producer Russia.

Other metals, including copper, slipped after disappointing data showed the U.S. economy barely grew in the first quarter as exports tumbled.

Business tailed off as traders squared up ahead of market holidays in Shanghai on Thursday and Friday and in London on Monday.

Three-month nickel on the London Metal Exchange (LME) closed up 0.96 percent at $18,325 a tonne. It is up nearly 15 percent this month, in the fifth consecutive month of gains. Prices are trading more than 30 percent higher in the year to date.

An Indonesian ban on exports of unprocessed ore from January tightened supplies of nickel ore, which top buyer China uses to produce nickel pig iron for stainless steel. This could force mills to increase use of higher-grade refined metal.

“It is probably going to take some time before Indonesia is able to turn its ore into refined nickel to export,” said Caroline Bain, senior commodities economist at Capital Economics.

“From the current price level I do feel it is overdone and we could see prices dropping back but I expect it to strengthen again going into next year as stocks would have been depleted by then.”

Sanctions on Russia over its actions in Ukraine have fuelled concerns that exports of top refined producer Norilsk Nickel could be hit.

Norilsk and top Russian aluminium producer UC Rusal , however, are not among the 17 companies that the United States sanctioned this week.

There were some signs that nickel’s rally may be cooling, given prices failed to react to a 5.2 percent drop in Norilsk’s first-quarter production, broker Triland said.

“The fact that the nickel price is closing mostly unchanged on the day is probably a sign that the market is tired and still due a downward correction,” it said in a note late on Tuesday.

COPPER SLIPS

Copper, aluminium and other metals trended lower after U.S. first quarter GDP rose at an annual rate of 0.1 percent, the slowest since the fourth quarter of 2012 and compared to expectations of 1.2 percent.

LME copper dropped 1.04 percent to close at $6,645 a tonne. Prices are flat for the month, giving up gains after having hit $6,798, the highest since March 7, in the previous session.

A crackdown on credit in China has curbed the ability of traders and manufacturers to finance copper imports, squeezing domestic supply and helping driving domestic premiums to the highest in almost three years.

Aluminium shed 0.77 percent to finish at $1,800 a tonne.

Michael Widmer, metals strategist at Bank of America Merrill Lynch, said the world ex-China had moved into a market deficit, mainly due to a revival of global growth, but also due to increased use in vehicles.

“We believe aluminium usage is also increasingly supported by structural industry changes, including tighter emission standards,” he said in note. “We estimate that the auto industry could boost aluminium offtake globally by around 2.5 million tonnes over the coming 2.5 years.”

Zinc ended down 0.68 percent at $2,041 a tonne, lead lost 0.19 percent to close at $2,106 and tin dropped 1.06 percent to $22,950.

PRICES

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

Three month LME tin (Additional reporting by Melanie Burton in Sydney, editing by William Hardy and Keiron Henderson)

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