nickel leads metal price declines in london after

June 1 (Bloomberg) -- Nickel prices led declines on the London Metal Exchange after workers at Inco Ltd., the world's second-largest nickel producer, endorsed a new three-year labor contract, averting a strike that may have cut output.

More than two-thirds of about 3,300 workers operating mines and plants in Ontario voted yesterday to accept the new pact, according to Wayne Fraser, a labor union spokesman. Negotiators for Toronto-based Inco and the United Steelworkers union agreed to the proposed contract on May 29. Since then nickel has had its biggest three-day drop since September 2005.

``A lot of the hype has been in the anticipation that negotiations wouldn't go smoothly,'' said William Adams, a Saffron Walden, England-based analyst at metals information company Basemetals.com.

Nickel for delivery in three months dropped as much as $1,000, or 4.6 percent, to $20,900 a metric ton and traded at $21,350 as of 11:28 a.m. local time. Prices have risen 58 percent this year, trading at record $23,050 a ton May 26.

If the labor agreement is ratified by the workers, nickel could fall to $18,000, Adams said.

Aluminum fell $25 to $2,625 a ton on the LME, after earlier trading as low as $2,595. The metal's decline came after Alcoa Inc., the world's largest aluminum producer, yesterday reached a new labor agreement with the United Steelworkers.

``It looks like mining companies are trying their best to avoid labor action that will disrupt production when metal prices are so high,'' said Wang Feihong, an aluminum analyst at Beijing Antaike Information Development Co.

Alcoa's labor agreement is ``potentially non-bullish,'' Adams said. Aluminum's decline could affect other metals, he said.

``If you are looking at commodities as a basket, gold's broken down,'' he said. ``Maybe that's a signal that others will also break down.''

Copper fell $170, or 2.2 percent, to $7,730. Tin declined $95 to $8,200 a ton and zinc fell $150 to $3,520 a ton. Lead advanced $4 to $1,075.


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

Last Updated: June 1, 2006 06:44 EDT

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