nickel looking toppy

Nickel Falls After Stockpiles Jump to 11-Month High; Lead Drops

By Chanyaporn Chanjaroen

June 5 (Bloomberg) -- Nickel declined in London, snapping two days of gains, after stockpiles climbed to the highest in almost 11 months. Lead fell on prospects of increased supply as Xstrata Plc said it will lift restrictions on metal deliveries from its U.K. smelter after a five-month disruption.

Inventories of nickel tracked by the London Metal Exchange jumped 6.3 percent to 8,460 metric tons, the LME said today in a daily report. That's the highest since July 10, 2006. Production will beat use by 70,000 tons in 2007, compared with a shortage last year, the International Nickel Study Group said on May 14.

``We expect more deliveries of nickel,'' said Andrew Silver, a trader at London-based Natixis Commodities Markets Ltd., one of 11 companies that trade on the LME floor. ``There's more room for prices to fall. Demand is pretty lackluster as well, as prices are incredibly high.''

Nickel for delivery in three months on the LME fell $1,050, or 2.2 percent, to $46,600 a ton as of 11:34 a.m. local time.

The metal, used in stainless steel, has dropped 10 percent since trading at a record high of $51,800 a ton on May 9 because users including Outokumpu Oyj, the world's third-largest stainless-steel producer, are reducing demand.