LONDON, Jan 16 (Reuters) – Nickel, the best performer among the base metals last year, is currently getting a reality check in the form of surging exchange stocks.
London Metal Exchange (LME) inventory has more than doubled in the space of little more than a month, with almost 120,000 tonnes of metal flooding into registered warehouses.
The stock surge has dampened speculative spirits, with the London price hemmed in below the $14,500 per tonne level since the start of January, a long way off the five-year high of $18,850 per tonne seen as recently as last September.
Technical tightness, rather than a cataclysmic change in fundamentals, has caused the sudden appearance of so much metal, and there are already signs that the flood may be abating.
However, the sharp turnaround in LME stocks has changed the optics of a market that last year rallied on supply shortfall fears. China’s booming nickel raw material imports and falling refined metal imports are reinforcing the message that there is no imminent supply crunch.