- LME/ShFE arb: http://bit.ly/2wZSAEz
- Market waiting for outcome of Fed's two-day meeting on Weds
- Zinc cash to 3-mth backwardation highest since 2015
(Adds zinc, updates prices)
Nickel prices fell on Tuesday towards the one-month lows hit last week as funds took profits, but concern about supplies from the Philippines and healthy demand, particularly from Chinese stainless steel mills, are expected to lend support.
Benchmark nickel CMNI3 on the London Metal Exchange was untraded in the rings, but bid down 2.1 percent at $11,000 a tonne from an earlier $10,945. Last week the contract touched $10,845, its lowest since Aug. 18.
"Nickel rose about 40 percent between July and early September, overshooting to above $12,000. Speculators are selling," said Societe Generale analyst Robin Bhar.
"We estimate marginal production costs at around $10,400/$10,500, that will be an anchor for the downside. Demand from stainless and non-stainless applications is healthy."
The market was also looking ahead to the outcome of a two-day meeting of the U.S. Federal Reserve starting on Tuesday.
SPECS: "Nickel has seen the speculative long decline from a high of 47 percent of open interest on Sept. 6, to our latest estimate of 27 percent of open interest, or 43,000 lots," analysts at Marex Spectron said. One nickel lot is 6 tonnes.
PHILIPPINES: Philippine lawmakers last month filed a bill seeking to ban mining in watershed areas and exports of unprocessed ores and require miners to get legislative approval before operating. The Philippines is the world's top nickel ore supplier.
INDONESIA: However, rising exports of nickel ore from Indonesia, another top producer, are expected to cap prices. To date, Indonesia has issued export permits for 8.2 million tonnes of annual nickel ore exports
STAINLESS: About two-thirds of global nickel demand, estimated at around 1.9 million tonnes, will be used to make stainless steel.
STOCKS: Nickel stocks in LME approved warehouses have held steady between 360,000 and 390,000 tonnes for much of this year, but lower cancelled warrants -- metal earmarked for delivery -- are weighing on prices.
NICKEL DEFICIT: Data from the International Nickel Study Group showed the nickel market deficit at 400 tonnes in June compared with a 6,700 tonne shortfall in May.
CHINA: Overall industrial metals were under pressure from weak property market data from China, which accounts for nearly half of global demand for industrial metals.
ZINC: The zinc price was softer at $3,096 from Monday's close at $3,097. Zinc CMZN3 is holding above $3,000 on expectations of shortages, but higher prices are likely to mean idled capacity is dusted off, production raised and new capacity brought forward.
ZINC HOLDINGS: One dominant and one large holding of zinc cash contracts and warrants are fuelling concern about metal availability for nearby delivery, traders said. That has pushed the premium for the cash over the three-month contract MZN0-3 above $20 a tonne, its highest since May 2015.
ELSEWHERE: Copper CMCU3 was up 0.1 percent at $6,540, aluminium CMAL3 was up 2 percent at $2,131.5, lead CMPB3 gained 0.8 percent to $2,409 and tin CMSN3 added 0.1 percent to $20,725 a tonne.
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Top base and precious metals analysis - GFMS http://tmsnrt.rs/2lvmIzW
LME/ShFE arb: http://bit.ly/2wZSAEz
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