Nickel Drops to Six-Year Low on Weaker Stainless-Steel Outlook

Nickel Drops to Six-Year Low on Weaker Stainless-Steel Outlook

Nickel fell to the lowest in almost six years on concern that demand for the metal used in stainless-steel production will drop in China, the world’s top consumer.

China’s 2015 steel production will fall 0.5 percent from a year earlier, and anti-dumping measures are creating more headwinds to the industry, Morgan Stanley said Monday. Nickel stockpiles monitored by the London Metal Exchange expanded 5 percent this year, reaching 435,048 metric tons on Monday, the highest in records going back to 1979.

“The whole idea that Chinese stainless-steel production is going to be underperforming for a while is spooking the market,” Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview. “You would expect to use less nickel, on the margin.”

Nickel for delivery in three months fell 3.8 percent to settle at $12,395 a metric ton at 5:50 p.m. on the LME, after touching $12,340, the lowest since May 2009. Prices dropped 12 percent this month, the most since September, and declined for the third straight quarter.

China accounted for 51 percent of the world’s crude-steel production in February, according to the World Steel Association. Output in the country will contract this year after consumption peaked and more mills are shut, according to the China Iron & Steel Association.

The economic slowdown in China, the top metals consumer, is dragging other raw materials lower. Lead capped a third straight quarterly loss, and tin slid for a fourth, the longest slump since 2001. The Bloomberg Commodity Index of 22 components is trading near a 12-year low.

Also in London, copper for delivery in three months slipped 0.7 percent to $6,041 a ton ($2.74 a pound). The metal fell for the third straight quarter.

On the LME, aluminum, zinc, lead and tin declined.

In New York, copper futures for May delivery slid 1.5 percent to $2.74 a pound on the Comex.

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