Markets

Nickel slides as investors shun risk, take profits

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President Donald Trump issued another warning to North Korea on Friday with a reference to US weapons as being "locked and loaded".

"I think there's a combination of heightened geopolitical risk today and probably a bit of profit taking," said Caroline Bain, chief commodities economist at Capital Economics in London.

"Metals have had a good run and it's been underpinned by recent good activity data out from China, but I think it's gone a bit too far."

The industrial metals complex probably needs a correction in the region of 10 percent to get back into balance, Bain added.

The London Metal Exchange index of six base metals had climbed 13 percent in the past month up to Thursday's close.

NICKEL: LME benchmark nickel was the biggest loser on the exchange, bid down 3.2 percent at $10,635 a tonne during official open outcry activity after gaining nearly a quarter over the past month, touching a four-month peak on Thursday.

"We're probably not going to see a big drop in Philippine nickel output, we've got Indonesian exports resuming now and still high stocks of refined metal," Bain said.

"The market is tightening, but it's still very comfortably supplied, so it's hard to get too positive on nickel."

CHINESE STEEL: LME metals were also pressured after Chinese steel and iron ore futures slid as the Shanghai Futures Exchange urged investors to trade "rationally" and keep the market stable following a speculative rally.

Nickel and zinc were hit hardest since the former is mostly used in stainless steel while the latter's biggest demand is for galvanising steel.

ZINC/LEAD: Three-month LME zinc was bid 1.2 percent lower at $2,903 in official rings while lead was bid down 1.1 percent at $2,341.

ALUMINIUM: Trading data in aluminium show some investors are bracing for a correction from the recent rally, with demand weak and production cuts in China to reduce pollution likely to be not as big as expected.

LME aluminium was bid unchanged at $2,037 in official activity.

COPPER: LME copper was bid down 0.7 percent at $6,378 in official rings amid indications that physical demand in China were faltering.

"After spending two weeks at levels not seen since November, Yangshan premiums have come under pressure, dipping today for the second time this week," Alastair Munro at broker Marex Spectron said in a note.

TIN: LME tin was little changed, trading up $5 or 0.03 percent at $20,330 during official rings.

 

 

Copyright Reuters, 2017