July 23, 2019 / 11:12 AM / a month ago

METALS-Nickel clings to one-year high, but rally seen as excessive

    * GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl 
    * LME nickel stocks touch lowest since January 2013

 (Adds closing prices)
    By Zandi Shabalala
    LONDON, July 23 (Reuters) - Nickel slipped on Tuesday and
analysts said prices that were still near one-year highs for the
metal used to make stainless steel were not supported by most
fundamentals.
    Benchmark nickel         on the London Metal Exchange (LME)
ended 0.9% lower at $14,170 per tonne after declining 3% in the
previous session.
    "We are not confident that this level can be sustained
because the second half is going to represent changing
conditions in Chinese stainless steel demand and therefore 
destocking," said Macquarie analyst Vivienne Lloyd.    
    Speculators and physical buyers have pushed prices on the
LME up 25% within two weeks. 
    Reuters reported Chinese firm Tsingshan Holding Group has
been buying large quantities of nickel on the LME to supplement
its own output.                 
    
    STAINLESS DEMAND: Nearly 70% of global nickel consumption,
estimated at 2.4 million tonnes this year, is accounted for by
stainless steel mills, a majority of which are in China.    
    NICKEL STOCKS: Headline nickel inventories in LME-approved
warehouses are at their lowest since January 2013 at 100,422
tonnes. MNISTX-TOTAL
    A single entity holds between 50% and 79% of LME nickel
warrants, exacerbating fears over short supplies. <0#LME-WHL>
    TRADE TENSIONS: China strongly opposes U.S. sanctions on a
Chinese energy firm accused of violating curbs on Iran's oil
sector imposed over Tehran's nuclear programme, its foreign
ministry said.             
    The potential standoff over the sanctions could escalate
long-standing tensions between the world's two largest economies
and further sap demand for metals.
    CHINA GROWTH: China's industry ministry said "arduous
efforts" will be needed to achieve this year's industrial output
growth target, as trade protectionism weighs on exports and
clouds the outlook for the world's second-largest economy.
            
    COPPER OUTPUT: For the first four months of the year, the
global copper market was in a 155,000-tonne deficit compared
with a 64,000-tonne deficit in the same period a year earlier,
the International Copper Study Group said.             
    ALUMINIUM: Canada's exemption from U.S. tariffs on imports
of aluminium metal has boosted earnings at the Canadian
operations of companies such as Rio Tinto         and Alcoa
      , but has not cut costs for U.S. consumers.             
    COLUMN: Global aluminium production fell by 0.5% in the
first half of this year, according to the International
Aluminium Institute.             
    ZINC TIME SPREADS: The discount of cash LME zinc to the
three-month contract CMZN0-3 touched $13 a tonne on Monday,
the biggest discount since September last year, indicating ample
 near-term supplies.
    DOLLAR: Most metals were under pressure from a stronger U.S.
dollar. The currency was boosted by a deal between U.S.
President Donald Trump and congressional leaders on a two-year
extension of the debt limit.       
    PRICES: Copper         shed 0.8% to $5,968 per tonne,
aluminium         was unchanged at $1,816, zinc         added
0.6% to $2,432, lead         ended 1.1% higher at $2,031, while
tin         shed 1% to $17,675, after touching is lowest since
2016.

 (Additional reporting by Mai Nguyen in SINGAPORE;
Editing by David Evans and Edmund Blair)
  
 
 
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