London nickel is hovering around a 14-month low on Wednesday, as a relentless rise in exchange-held nickel stocks overshadowed expectations of a shortage of nickel ore towards the end of the year.
China’s stocks of nickel ore, used to make stainless steel, have dwindled following an export ban by Indonesia at the start of last year, raising expectations producers will have to turn to nickel instead.
LME prices jumped more than 50% early last year, but have since slumped back to trading levels in place before the ban.
“Clearly the bulls have capitulated,” strategist Daniel Hynes of ANZ in Sydney told Reuters, adding that there appeared to be no sign of nickel ore being replaced with nickel in China.
LME stocks have surged by 30% in the past six months alone, hitting a string of record highs, to around 430,000 tons.