SINGAPORE – Shanghai nickel dropped to its lowest in almost four months on Thursday due to lower demand from the stainless steel industry, nickel’s main consumer.
The most-traded nickel contract on the Shanghai Futures Exchange (ShFE) fell as much as 2.1 percent to 111,390 yuan ($15,824.92) a ton, its lowest since Aug. 8.
Three-month nickel on the London Metal Exchange (LME) CMNI3 dropped to a one-week low of $14,200 a ton.
The stainless steel side has cut some product lines due to high stock and lower profits, leading to a drop in nickel pig iron (NPI) prices, which is in turn hurting prices of the refined metal, said a China-based nickel analyst.
NPI is a low-grade nickel mixture invented in China as a cheaper alternative to pure nickel for the production of stainless steel and is one of the most popular forms of nickel used in Asia.
Spot prices of NPI with 10-15 percent nickel content provided by Shanghai Metals Market SMM-NIC-NPI15 fell to 1,030 yuan a ton on Wednesday, their lowest since July 18, Refinitiv Eikon data showed.
Nickel has outperformed other base metals so far this year on supply worries ahead of a ban on exports from top nickel ore producer Indonesia, boosting LME nickel to a five-year high in September.
However, prices have since fallen due to weak demand. – Reuters