Nickel slumps to seven-month low on concerns about tariffs, China

LONDON: Nickel sank to its lowest in more than seven months on Monday, weighed down by worries about China's economy, escalating trade tensions and weak steel prices.

"I'm surprised that any of the metals are up today given the combination of the Caixin PMI in China, the lack of progress on NAFTA talks and the tit-for-tat tariff contest between China and the U.S.," said Caroline Bain, chief commodities economist at Capital Economics in London.

China's manufacturing activity grew at the slowest pace in more than a year in August, with export orders shrinking for a fifth month and employers cutting more staff, the Caixin/Markit Manufacturing Purchasing Managers' Index showed.

China is the world's biggest consumer of industrial metals.

"Nickel is quite tied up with the stainless steel industry, which has been directly affected by tariffs already. So that might be why it's been particularly hard hit," Bain added.

Also weighing on nickel, mainly used to make stainless steel, was another fall in construction steel rebar prices in Shanghai after they posted their weakest weekly performance since late March.

Benchmark nickel on the London Metal Exchange tumbled to $12,695 a tonne, the weakest since Jan. 23, before recovering to $12,780 by 1011 GMT, a decline of 0.2 percent. On Friday, nickel gave up 3.7 percent.

* COPPER: LME copper slipped to its weakest since Aug. 23 at $5,950.50 a tonne, before paring losses to $5,982, up 0.1 percent. Prices on Friday fell 1.5 percent to take August's decline to 5.5 percent. It was the biggest monthly drop in two years and the third monthly fall in a row.

* INVESTORS: Hedge funds and money managers trimmed their net short positions in COMEX copper futures and options in the latest week, regulatory data showed on Friday.

* ZINC: Three-month zinc edged up 0.1 percent to $2,459.50 a tonne. "We note the sharp rise in reported Shanghai zinc CIF premiums from $160/tonne to $230," Alastair Munro at broker Marex Spectron said in a note.

* LEAD: LME lead was the biggest gainer, rising 1.2 percent to $2,103 a tonne as inventories continued to fall. On-warrant LME stocks fell by 1,050 tonnes to 59,050, the lowest since June 2013, data showed on Monday.