* Pollution curbs hit China NPI producers in Shandong -analyst
* Coming Up: Euro zone Markit services PMI Feb at 0900 GMT (Updates prices)
By Melanie Burton
MELBOURNE, March 4 (Reuters) - London nickel held 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 percent early last year, but have since slumped back to trading levels in place before the ban.
“Clearly the bulls have capitulated,” said strategist Daniel Hynes of ANZ in Sydney, adding that there appeared to be no sign of nickel ore being replaced with nickel in China.
LME stocks MNISTX-TOTAL have surged by 30 percent in the past six months alone, hitting a string of record highs, to around 430,000 tonnes.
Three month nickel on the London Metal Exchange (LME) edged higher to $13,730 a tonne by 0700 GMT, after hitting its lowest since January 2014 at $13,610 a tonne on Tuesday.
Macquarie, however, said nickel demand in China should get a boost from a central government order to close some nickel pig iron (NPI) factories to curb pollution, citing China research house Antaike.
It estimated this will cut 1,900 tonnes of low-grade NPI production, equivalent to 35 percent of total low-grade NPI supply in China.
“This will worsen the supply situation for nickel and accelerate a deficit in nickel,” Macquarie said.
In other metals, LME copper edged up by 0.4 percent to $5,847 a tonne, paring a 1.4 percent loss in the previous session, which was its biggest daily loss since mid February.
The most-traded May copper contract on the Shanghai Futures Exchange was down 0.8 percent at 42,460 yuan ($6,771) a tonne.
In news, the London Metal Exchange is considering whether its electronic LMESword system could be used to oversee metal stored outside the exchange, an executive said on Tuesday, the latest sign that a financing fraud in China was still roiling banks and trading.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Three month LME tin
$1 = 6.2709 Chinese yuan renminbi Reporting by Melanie Burton; Editing by Biju Dwarakanath