Nickel declines as stocks rise

Nickel dropped to the lowest in more than two weeks, leading declines in metals, after stockpiles monitored by the London Metal Exchange rebounded from the lowest in 15 years.

Inventories rose 138 metric tons, or 4.6 percent, to 3,120 tons, the exchange said today in a daily report, the first gain since Jan. 23. Still, that's less than one day of global consumption estimated at 1.4 million tons this year by Deutsche Bank AG.

The nickel market ``doesn't look as tight as last year any more,'' said Michael Widmer, director of metals research at Calyon in London. Calyon is a member of the LME. ``There is no acute shortage of the metal in the physical market.

Nickel for delivery in three months dropped $775, or 2.2 percent, at $35,025 a ton as of 12 p.m. local time. That's the lowest intraday price since Jan. 17. Earlier, the contract advanced as much as 2.8 percent to $36,800 a ton.

Prices of nickel have jumped more than sixfold in the past five years, outperforming all LME-traded metals as supply failed to keep up with demand from China, the world's largest producer of stainless steel. The metal, used in stainless-steel production, traded at a record $38,950 a ton Jan. 26.

LME metals inventories including nickel remain ``at historically low levels,'' and prices will probably stay above averages, BHP Billiton Ltd., the world's largest mining company, said today.

The nickel market is ``structurally tight,'' BHP Billiton Chief Financial Officer Alex Vanselow said at a media briefing in London. The company is also the world's third-largest nickel producer.

A metals-price rally boosted BHP Billiton's profit 41 percent in the first half ended Dec. 31, the company said today. Sales rose 22 percent to $22 billion.

Copper's inventory gain reported today also depressed prices. The LME-monitored stockpiles jumped 3,175 tons, or 1.5 percent, to 215,750 tons, according to the LME data.

Prices for metal for delivery in three months fell $50.50, or 0.9 percent, to $5,419 a ton.

Tin stockpiles monitored by the exchange fell 2 percent to 10,725 metric tons, the LME said, the lowest since November 2005. Inventories have dropped 33 percent in the past 12 months, contributing to a price gain of 56 percent in the same period.

Still, tin declined $175, or 1.5 percent, to $11,750 a ton.

Production from Indonesia, the world's second-biggest producer, may increase after five private companies received operating permits to produce tin this year.

Latif Pribadi, a spokesman for the Bangka-Belitung provincial government couldn't tell the size of the companies' production. Additional 16 companies have applied for licenses, he said.

The Southeast Asian nation's crackdown on illegal tin miners last year resulted in a closure of 20 smelters without mining permits and reduced the country's tin output.

Also on the LME, lead dropped $11 to $1,560, and zinc lost $44 to $3,176.