Nickel Jumps Most Since April as China's Use Grows; Lead Gains
By Chanyaporn Chanjaroen
Sept. 18 (Bloomberg) -- Nickel in London jumped 6 percent, the most in five
months, on demand growth in China, the largest consumer of the metal used in
stainless steel. Copper and lead also gained.
Jinchuan Group Co., Asia's biggest nickel producer, raised its price for a
second time this month on demand from Chinese steelmakers. China's nickel
use jumped 35 percent in the seven months ended July 31, Macquarie Bank Ltd.
said, citing International Nickel Study Group data.
``The market seems to focus more on what's going on in China than the rest
of the world,'' Max Layton, an analyst at Macquarie in London, said in a
telephone interview.
Nickel for delivery in three months on the London Metal Exchange gained
$1,750 to close at $30,750 a ton. The percentage gain was the biggest since
April 3. The price earlier reached $31,000, the highest since Aug. 1.
The metal has gained 24 percent from this year's low of $24,800 on Aug. 16.
Demand has declined demand in Western Europe and other Asian countries,
where steelmakers have continued to cut production and reduce nickel
purchases, Layton said.
Output beat usage by 49,000 tons this year through July, Layton said, citing
data from the Lisbon-based study group. Stockpiles monitored by the LME fell
6 tons today to 29,958 tons, the first decline since the end of August. They
have more than tripled this year.
Interest Rate Cut
The Federal Reserve lowered its benchmark interest rate by a half point,
more than economists forecast, to 4.75 percent, hoping to keep the U.S. from
sinking into a recession sparked by fallout from the housing-market
collapse.
``A constructive Federal Open Market Committee policy statement and interest
rate cut are likely to see a knee-jerk bounce in base metals,'' Robin Bhar,
an analyst at UBS AG in London, said in a report before the Fed
announcement. ``We doubt this can be sustained given the worries over the
macro environment.''
A larger-than-expected rate cut may signal an economic slowdown, which would
hurt metals demand, said Michael Jansen, an analyst at JPMorgan Securities
Ltd.
Workers at Southern Copper Corp.'s operations in Peru will vote tomorrow and
Sept. 20 on whether to strike after failing to reach an agreement on wage
increases, smelter union General Secretary Arnaldo Oviedo said yesterday.
``Talks have failed and a strike appears practically inevitable,'' Oviedo
said. ``The company has kicked over the chessboard.'' Alberto Giles, a
spokesman for Phoenix-based Southern Copper, the world's fifth-largest
producer of the metal, declined to comment.
Five-Week Walkout
Strikes have cut copper output in Peru, Chile and Mexico, helping to spur a
19 percent rally in prices this year. Workers at three of Southern Copper's
mines in Mexico have been on strike since July 30, and contract workers at
Chile's Codelco, the world's biggest copper producer, ended a five-week
walkout on Aug. 1.
Copper gained $85, or 1.1 percent, to $7,585 a ton in London.
LME data show lead has become less available after stockpiles fell to a
17-year low. Metal for immediate delivery traded at a premium of $85 a ton
above the benchmark three-month price, the highest since Oct. 13.
Inventories fell 2.5 percent to 22,175 tons, the lowest since March 16,
1990.
Demand for lead, used in car batteries, beat production by 27,000 tons in
the seven months through July, the International Lead and Zinc Study Group
said yesterday.
The three-month lead contract climbed $10, or 0.3 percent, to $3,140 a ton.
Tin gained $160, or 1.1 percent, to $15,010 a ton, and zinc climbed $60, or
2.2 percent, to $2,840 a ton. Aluminum increased $12, or 0.5 percent, to
$2,407 a ton.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at
[EMAIL PROTECTED]
*Last Updated: September 18, 2007 15:18 EDT*
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