Nickel Falls on Speculation Steelmakers May Curb Consumption By Brett Foley March 21 (Bloomberg) -- Nickel fell for a third consecutive day in London on speculation that a 30 percent gain in prices this year will spur stainless-steel makers to switch to cheaper alternative ingredients. The metal, mostly consumed by producers of the steel used in kitchen appliances, has risen sixfold in five years. Steelmakers may turn to other materials such as chrome and laterite, an ore containing nickel, instead of refined nickel, said Nick Moore, an analyst at ABN Amro Holding NV. ``At these levels you will get price-induced demand destruction,'' Moore, who has covered the metal markets for more than two decades, said in an interview in London. ``When stainless-steel producers find they can't pass these costs onto their customers they will turn to substitution for some uses.'' Nickel for delivery on the London Metal Exchange fell $1,250, or 2.8 percent, to $43,350 a metric ton as of 11:51 a.m. in London. It has fallen 12 percent since trading at a record $48,500 on March 16. Inventories monitored by the LME jumped 18 percent to 4,302 tons, the exchange said today in a daily report. That's the biggest increase since Oct. 26. Producers in China, the world's largest user of the metal, may increasingly turn to laterite from the Philippines to reduce costs, Moore said. China's imports of laterite are forecast to rise more than 59 percent this year to exceed 6 million tons, from 3.77 million tons in 2006, Xu Aidong, analyst with Beijing Antaike Information Co., said today. Beijing Antaike advises China's government on metals policy.
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