Nickel Drops on Speculation Usage to Slow; Lead Gains to Record

Nickel fell in London, erasing an earlier gain that took the metal to a record, on speculation growth in global demand for stainless steel will slow. Lead rose to its highest ever.

Stainless-steel production will expand 8 percent this year, from 13.2 percent in 2006, Michael Widmer, director of metals research at Calyon, said by phone from London today. Nickel has gained 19 percent this year on expectations of strong demand from China, the world’s largest producer of stainless steel. The alloy is the largest end-use for nickel.

The rebuilding of inventories by consumers “is over and slower economic growth, particularly in the U.S., will slow demand for stainless steel,” Widmer said. “This is one reason we expect that upward pressure on nickel prices will be alleviated in the coming months.”

Nickel for delivery in three months on the London Metal Exchange slipped $50, or 0.1 percent, to $39,800 a metric ton as of 6:32 p.m. local time. Earlier, it rose as much as 1 percent to $40,250, beating the previous record of $39,999 set yesterday.

Inventories monitored by the LME fell for a second day by 468 tons, or 11 percent, to 3,930 tons, the exchange said in a daily report. Stockpiles have slumped 41 percent this year.

Lead, used in car batteries, rose $20, or 1.1 percent to $1,850, beating the record set yesterday by $5. Inventories tracked by the LME have fallen 55 percent in the last 12 months to 32,525 tons.

Tin Advances

Tin increased $395, or 2.9 percent, to $13,890 a ton. Earlier it traded at $13,900, the highest since at least 1989 according to Bloomberg data, beating the 17-year high set yesterday by $400.

Malaysia Smelting Corp. said in a statement today that it plans to resume tin sales at its Indonesian unit, PT Koba Tin, before April after local police probing possible illegal sales of tin ore arrested three directors of the division.

Tin supplies will fall short of demand by about 30,000 tons in 2007 because of reduced output in Indonesia, the world’s second-largest producer after China, U.K. consulting companies ITRI Ltd. and CRU said on Feb. 19.

The Indonesian government plans to tighten export regulations and crack down on illegal mining. Tin miners have until tomorrow to register for the right to export the metal from Indonesia. Only seven applications had so far been received, Diah Maulida, director general of foreign trade at the Ministry of Trade, said today.

Among other LME-traded metals, copper rose $170, or 3 percent, to $5,890 a ton, aluminum gained $40 to $2,782 and zinc increased $75 to $3,400.

Source: www.blomberg.com