LONDON, March 4 (Reuters) – Nickel prices climbed to a six-month peak on Monday as expectations of a fourth consecutive year of supply deficit were reinforced by signs of robust demand from stainless steel mills in China. Benchmark nickel on the London Metal Exchange (LME) was up 0.5 percent at $13,260 a tonne by 1037 GMT, having touched its highest since the end of August at $13,405. The price is up 24 percent this year, the best performer among LME metals.
“Ultimately the nickel market has been in deficit for three years running and we are expecting another deficit this year,” said Roskill senior analyst Olivier Masson. “The nickel price was probably oversold at the end of last year, when the market was worrying about global trade,” TRADE: The trade dispute between China and the United States has fuelled concern about global growth and demand, undermining sentiment in metals markets.
Inventories in warehouses monitored by the Shanghai Futures Exchange are below 10,000 tonnes and have fallen nearly 40 percent since the middle of November. SPREADS: Traders say the discount for the cash over the three-month contract is an incentive to buy nickel and sell it forward on the LME. The discount, or contango, of about $80 a tonne is enough to cover financing costs and leave a healthy profit. PROFIT-TAKING: Prices of copper are down on profit-taking by funds with long positions betting on higher prices. Traders say the market has been long on copper for some time, while others say the premium for the cash over the three-month contract at $34 a tonne should attract metal to LME warrant, relieving some of the tightness. PRICES: copper was down 1.4 percent at $6,386 a tonne, aluminium fell 1.9 percent to $1,882, zinc slipped 1.2 percent to $2,750, lead ceded 1.1 percent to $2,119 and tin was down 0.3 percent at $21,550.
