Link to article .......

Link to article .... http://www.bloomberg.com/apps/news?pid=20601081&sid=a2J5E1KwlCQQ&refer=australia

Article as follows:

Nickel Rises to Three-Week High as BHP Shuts Australian Smelter

By Chanyaporn Chanjaroen

June 12 (Bloomberg) -- Nickel rose to a three-week high after BHP Billiton Ltd., the world's third-largest producer of the metal, said it will shut down an Australian smelter and refinery that produces about 2 percent of world supply.

The earlier-than-planned rebuild of the Kalgoorlie smelter furnace will reduce nickel sales by 28,000 metric tons, the Melbourne-based company said today. The Kwinana refinery will be closed during the overhaul.

``It's a positive driver for the market,'' Adam Rowley, an analyst at Macquarie Group Ltd. in London, said today by phone. ``With the disruption in Australia, nickel is moving to a balance from a surplus.''

Nickel for delivery in three months on the London Metal Exchange rose as much as $1,400, or 6 percent, to $24,600 a ton, the highest intraday price since May 22. It traded at $24,595 a ton as of 6:16 p.m. local time.

The Kalgoorlie closure added to concern about supply. Minara Resources Ltd., Australia's second-largest nickel producer, cut its output forecast two days ago by as much as 23 percent. Stockpiles of the metal, used in stainless steel, have fallen 8.2 percent since April 30 to 47,220 tons, according to LME data.

Goldman Sachs Group Inc. reduced its nickel forecasts for this year through 2010 because of surplus supply. Prices will average $24,522 this year, 15 percent less than the previous estimate, the bank's analysts said in a report dated yesterday. They cut the 2009 forecast by 34 percent.

Slower growth in stainless-steel production will limit any gain in nickel prices this year, Macquarie's Rowley said. UBS AG's strategist John Reade recommends investors sell nickel futures once prices exceed $28,000, a level last reached May 8.

Commodities Index

The UBS Bloomberg Constant Maturity index tracking 26 commodities fell 0.7 percent as the dollar gained against the euro and yen, eroding commodities' investment appeal as a currency hedge.

Copper dropped $70, or 0.9 percent, to $7,850 a ton. LME- monitored copper inventories fell 650 tons, or 0.5 percent, to 120,625 tons, extending this year's drop to 39 percent. Including those monitored by bourses in Shanghai and New York, they totaled 169,469 tons, or 3.3 days of global consumption, according to Bloomberg calculations. Last year's average was 4.9 days.

Tin fell $400, or 1.9 percent, to $21,100 a ton after LME- monitored inventories fell 335 tons, or 4.5 percent, to 7,190 tons, the lowest since Sept. 1, 2005.

Among other LME-traded metals, aluminum dropped $8 to $2,952 and lead declined $40 to $1,840. Zinc fell $49 to $1,871 a ton.

To contact the reporter on this story: Chanyaporn Chanjaroen in London at [email protected]

Last Updated: June 12, 2008 13:22 EDT