Nickel prices fell for a third straight month in May and hit their lowest since June last year on Thursday at $8,810 a tonne. They have fallen 12 percent this year, the biggest drop among the major base metals.
"We saw the nickel ore export ban lifted in Indonesia, so we've seen Antam, for example, start exporting nickel ore to China," said ING commodities strategist Warren Patterson.
"The other potential big change going forward is the change in the environmental secretary in the Philippines. Market expectations are that we could see some sort of relaxation in policy. So where we saw 21 mines shut or suspended, we could see some of them coming back online."
Nickel was also caught up in broader negative sentiment after a survey showed that China's manufacturing activity contracted unexpectedly in May as demand weakened and shrinking factory prices dented profits.
LME NICKEL: Three-month nickel on the London Metal Exchange was untraded in official rings, but was last bid 1.3 percent lower at $8,850 a tonne.
PHILIPPINES: President Rodrigo Duterte this month appointed a former military man as the new environment minister after Congress dismissed his first choice, who had ordered the closure of more than half of the mines in the world's top nickel ore supplier.
INDONESIA: The relaxation in January of Indonesia's ban on exporting unprocessed nickel ore -- in place since the start of 2014 -- has added to concerns over rising supply.
NICKEL STOCKS: Nickel inventories at LME warehouses <MNI-STOCKS>, while well below their 2015 peak, remain at elevated levels. Stocks at more than 378,000 tonnes account for almost 20 percent of global consumption, estimated at nearly 2 million tonnes this year.
LME COPPER: Three-month LME copper, also untraded in official rings, was last bid down 0.4 percent at $5,660 a tonne.
CHINA MANUFACTURING: China's Caixin/Markit Manufacturing Purchasing Managers' index (PMI) fell to 49.6, indicating a contraction for the first time in 11 months and coming in below market expectations.
BHP COPPER: BHP Billiton said on Thursday that it had lifted a declaration of force majeure at its Escondida copper mine in Chile.
OTHER METALS: LME aluminium was up 0.1 percent at $1,930 in official midday training, while zinc was down 1.6 percent at $2,558.50. Tin and lead were both untraded in official rings, but were last bid up 0.4 percent at $20,400 and down 0.8 percent at $2,102.50 respectively.