Nickel prices hit a one-week low on Tuesday after the benchmark Chinese futures contract for stainless steel slumped to the weakest in five months as producers faced high input costs and sluggish demand.
Three-month nickel on the London Metal Exchange dropped as much as 1.5% to $15,655 a tonne, its lowest since Nov. 10.
The most-traded nickel contract on the Shanghai Futures Exchange slid 3.1% to 116,100 yuan ($17,685.23) a tonne, after five straight sessions of gains.
“The extended weakness in the Chinese stainless steel market seems to be dragging on nickel sentiment,” said Wenyu Yao, senior commodities strategist at ING.
Stainless steel futures in top metals consumer China fell 3.6%.
Nickel, a raw material for stainless steel, has risen 12% this year in London, touching $16,310 a tonne on Oct. 28, its strongest in more than 11 months.
“The upstream nickel ore supply is tight and the price is strong, while the downstream stainless steel demand is flat,” analysts at Huatai Futures said in a note.
Other base metals also edged lower, with LME copper down 0.2% to $7,091.50 a tonne by 0722 GMT after hitting a 29-month peak in the previous session as investors held back due to a resurgence in global coronavirus cases despite news about another promising vaccine.
* China’s stainless steel mills face higher costs for essential ingredient ferrochrome, if as expected, South Africa goes ahead with proposals to impose taxes on exports of chrome ore.
* A vote on a new contract for workers at Candelaria copper mine in Chile will be fiercely contested amid ongoing divisions about whether to continue a four-week-long strike.
* In Shanghai, copper dropped 0.4% and aluminum slipped 0.5%, while zinc rose 1%.
* In London, aluminum lost 0.1% and zinc fell 0.3%.