LONDON, Nov 27 Nickel’s spectacular fall since the middle of last year may have come to a halt, but without significant, enduring output cuts and stronger demand from China’s stainless steel mills the reprieve could be brief.
Benchmark nickel on the London Metal Exchange fell to $8,145 a tonne earlier this week, less than half the level seen in May last year and its lowest since the middle of 2003.
Funds reversing their bets on lower prices on the expectation that Chinese producers may cut output since then pushed prices back up to near $9,000 a tonne.
Speculation that miner and trader Glencore, the world’s fifth-largest producer of nickel, would cut output helped buoy prices last month.
But the optimism was short-lived.
“The problem is how permanent are the cuts, will that supply come back to the market at a later stage if prices recover and are they going to be offset by worsening demand,” said Edward Meir, analyst at INTL FCStone.
“That’s the quandary; the market is very sceptical, and so we could have a prolonged period of prices bumping along the bottom until we get a better handle as to what is going on.”
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