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METALS-Nickel drops as stocks rise, copper rebounds after U.S. data
July 10, 2014 / 10:13 AM / 3 years ago

METALS-Nickel drops as stocks rise, copper rebounds after U.S. data

* China copper imports fall 7.9 pct on month in June

* LME nickel stocks rise for second day

* U.S. jobless claims fall to lowest levels since before recession (Updates with closing prices)

By Harpreet Bhal and Eric Onstad

LONDON, July 10 (Reuters) - Nickel prices slid on Thursday as inventories rose, giving investors a reminder of an overhang of material despite an Indonesian export ban.

Copper rebounded after upbeat U.S. jobs data raised the prospect of higher demand for industrial metals.

Benchmark three month nickel on the London Metal Exchange (LME) shed 1.4 percent to close at $19,250 a tonne, paring losses after touching a session low of $19,015.

Nickel has gained nearly 40 percent this year after top exporter Indonesia banned shipments of unprocessed ore in January, sparking fears of shortages developing.

Stocks are high, however, after years of overproduction, which the ban has yet to erode. This was shown by LME nickel inventories MNISTX-TOTAL rising on Thursday for a second day.

“Analysts are generally bullish for nickel prices but at some stage we will need to see a drawdown in warehouse stocks to show that a tighter market is to become a reality,” Triland Metals said in a note.

Most analysts expect a new Indonesian government to confirm the export ban following elections this week that saw the two main candidates claim victory, but some people see potential for changes. A final vote count takes place later this month and the new president takes office in October.

“I expect the Indonesian government to allow exceptions (and) the deficits to be lower than feared,” Eugen Weinberg, head of commodity research at Commerzbank, told the Reuters Global Base Metals Forum this week.

COPPER

Copper prices rose on worries about shrinking supplies and growing optimism about demand for industrial metals.

LME three-month copper closed 0.5 percent higher at $7,162 a tonne, recovering from a low of $7,082.50 touched as some investors cashed in on recent gains. Earlier this week, the price for the metal used in power and construction hit a 4-1/2 month high at $7,212 a tonne.

In top copper consumer China, copper imports fell in June to the lowest since April 2013 as banks reduced lending for metals imports following an investigation into alleged fraudulent metals financing at Qingdao port.

The weak Chinese import data triggered some profit-taking, Weinberg said, but copper moved back into positive territory after strong U.S. jobs data was released.

Signs of global economic recovery have gathered pace following last week’s U.S. jobs data and factory numbers from China that reinforced expectations of a pickup in demand for industrial metals.

The trend was given more impetus on Thursday as data showed U.S. jobless claims dropped to one of the lowest levels since before the 2007-09 recession.

Given an unusually synchronised rally across stocks, bonds and commodities in the first half, commodities are attracting fresh investment as the best potential shield should there be a correction, said analyst Ed Meir of INTL FC Stone in New York.

“We suspect that if there is some fallout ahead or decoupling, the commodity sector should be able to hold its ground, as it has been a perennial laggard for the past four years and nearly nowhere as overbought as the other two sectors. I think that will bring in continued fund interest.”

In other metals, aluminium finished down 0.7 percent at $1,925 a tonne, having touched a 13-month peak of $1,959 in the previous session.

Zinc closed down 0.5 percent at $2,271 a tonne after touching a three-year high of $2,318.50 hit earlier in the week. Lead dipped 0.3 percent to end at $2,189 a tonne.

Tin failed to trade in closing rings and was last bid at $22,025, down 1.2 percent.

PRICES

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 (Additional reporting by Melanie Burton in Sydney, editing by Mark Heinrich and David Evans)

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