Nickel Rallying Behind Low Supplies

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Nickel capped the longest rally in a month on the London Metal Exchange amid concern that supplies will lag behind demand this year as an export ban in Indonesia crimps ore shipments.

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Costs of nickel-pig iron, a lower-grade alternative to refined metal, are rising and pipeline inventories are low so there is potential for restocking, Gayle Berry, a strategist at Jefferies Group LLC, told Bloomberg News in a report today. She forecast a deficit of about 40,000 metric tons after a 45,000-ton surplus in 2014. In the second half of last year, nickel dropped 20 percent on signs of slowing demand in China and Europe.

“The supply condition is a concern, and some buyers are back after the big drop in prices,” Edward Meir, an analyst at INTL FCStone in New York, told Bloomberg. “While we may not see a big rally, we could definitely see some support at these levels.”

The nickel spot price closed as the biggest mover for Wednesday, January 7. Switching from a downward trend, the metal closed at $15,275 per metric ton following a 4.8% increase. Following a 4.5% rise on Wednesday, the 3-month price of nickel closed on the LME at $15,320 per metric ton. At INR 972.70 ($15.30), the cash price of primary Indian nickel finished the market day up 0.5% per kilogram.

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Chinese stainless steel closed mixed on Wednesday. After remaining flat for three days, the price of Chinese ferro-moly fell 2.2% yesterday to CNY 88,000 ($14,172) per metric ton. Wednesday saw the price of Chinese ferro-chrome drift down 0.5% to CNY 10,900 ($1,755) per metric ton after three quiet days.

The price of Chinese primary nickel rose 1.3% to CNY 110,200 ($17,747) per metric ton. For the fifth consecutive day, the Allegheny Ludlum 316 stainless surcharge held flat at $1.01 per pound. The price of Chinese 316 stainless coil was unchanged at CNY 23,700 ($3,817) per metric ton. Chinese 304 stainless coil held its value yesterday at CNY 16,700 ($2,689) per metric ton. The price of Chinese 316 stainless steel scrap showed little movement yesterday at CNY 13,250 ($2,134) per metric ton.

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