LONDON: Nickel prices slumped along with most other industrial metals on worries over a potential global trade war curbing economic growth and metals demand.
"It started with copper and aluminium, and is now turning to those where you have length to liquidate or if you want to build fresh shorts because of fears of a global trade war," said Robin Bhar, head of metals research at Societe Generale.
"You look at equities and they are struggling, the VIX index is slightly higher, so there's clearly risk-off sentiment for the time being."
Share markets were relatively calm on Thursday after signs US President Donald Trump could spare some key trade partners from planned protectionist tariffs on steel and aluminium, but the VIX gauge of volatility was up 1.7 percent.
"The selling in base is also driven by CTA sell programs with some metals now seeing shorts established," Alastair Munro, of broker Marex Spectron, said in a note. He was referring to fund tradsing driven by computer algorithms.
NICKEL: Benchmark nickel was the biggest decliner on the London Metal Exchange, down 2.8 percent at $13,220 a tonne by 1121 GMT. Nickel is the biggest speculative long on the LME, accounting for 13 percent of open interest, according to estimates from Marex Spectron.
CHINESE FERROUS METAL: Nickel, mainly used to produce stainless steel, was also pressured after Chinese steel and iron ore futures tumbled almost 4 percent on soft demand in the world's top consumer of both commodities and after China warned it will respond as necessary in the event of a trade war.
NPI: Also weighing on nickel were worries that China's output of nickel pig iron was expected to expand almost 15 percent this year to 447,000 tonnes, SP Angel analyst John Meyer said in a note. "Rising production of nickel pig iron across Asia has curbed (price) gains."
CHINA DATA: Providing some support to metals, data showed that China's exports unexpectedly surged in February, suggesting its economic growth remains resilient even as trade relations with the United States deteriorate.
ZINC: Three-month LME zinc fell 0.5 percent to $3,242.50 a tonne after touching $3,229, the weakest since Dec. 22.
The spread of cash zinc to the three-month contract moved to a $3.50 discount for cash from a premium of nearly $50 in late February, showing healthier near-term supply.
ALUMINIUM: LME aluminium was the only LME metal in positive territory, buoyed by consumer buying, rising 0.3 percent to $2,104 a tonne.
COPPER: LME copper shed 1.5 percent to $6,848 a tonne after data showed China's copper imports fell 20 percent month on month in February.
COMING UP: European Central Bank interest rate announcement followed by press briefing by ECB President Mario Draghi at 1245 GMT.
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