Nickel dips for second day

Nickel dropped for a second consecutive day in London after a 37 per cent price gain this year made the metal used in stainless steel less affordable.

The metal has risen ninefold in the past five years and traded at a record on March 16. This year's rally is 'madness', Jinchuan Group Co, China's largest nickel producer, said yesterday in a statement posted on its website. It predicted a price "slump'' as more supply comes on stream.

"The high level of nickel prices made it difficult for buyers,'' said Peter Hickson, a metals analyst at UBS AG . "When prices go up this fast you will see a relatively fast retracement,'' he added.

Nickel for delivery in three months dropped $700, or 1.5 per cent, to $45,900 a metric tonne. That's 5.4 per cent lower than the $48,500 record traded at on March 16.

Prices have soared after China, the world's largest user of the metal, expanded its stainless-steel industry. Nickel producers haven't been able to catch up with demand, thus creating a production shortfall of 50,000 tonne last year, according to the Ware, England-based World Bureau of Metal Statistics.

Consumers have turned to stockpiles to fill up the supply gap. Inventories tracked by the LME dropped 1.5 per cent to 3,648 tonne , the exchange said. Stockpiles have declined 89 per cent in the past year to a level equivalent to less than two days of global consumption.

Tin shoots up: Tin rose to the highest since 1989 on the London Metal Exchange, while copper and zinc also increased.

Tin for delivery in three months on the LME gained $200, or 1.4 per cent, to $14,150 a tonne, beating the 18-year high set yesterday by $25.

Copper rose $10 to $6,640, zinc increased $15 to $3,220 and aluminium declined $12 to $2,800. Nickel and lead were unchanged.