Nickel Gains in London After Stockpiles Drop to 15-Year Low By...

Nickel Gains in London After Stockpiles Drop to 15-Year Low

By Chanyaporn Chanjaroen

Feb. 6 (Bloomberg) -- Nickel gained in London as stockpiles of the metal used to make stainless steel dropped to their lowest in more than 15 years, prompting concern that there may be a supply deficit in 2007.

Inventories of the metal monitored by the London Metal Exchange slid 7.5 percent to 2,982 metric tons, the lowest since July 1991, the LME said today in a daily report. That's equal to less than one day of global consumption. Demand will outpace production by 3,600 tons this year, following a deficit of 23,300 tons in 2006, Deutsche Bank AG said in a Jan. 12 report.

``Nickel stockpiles are going to decline further as the market is genuinely tight,'' said Alex Heath, who heads the base-metals trading team at RBC Capital Markets in London.

Nickel for delivery in three months on the LME gained $705, or 2 percent, to $36,400 a ton as of 9:44 a.m. It dropped 4.6 percent yesterday, the biggest decline since Jan. 8.

The metal traded at a record $38,950 on Jan. 26. It has more than doubled in the past year as China increased consumption, overtaking Japan as the world's largest stainless- steel producer.

Also on the LME, copper gained $40 to $5,380 a ton, aluminum slipped $2 to $2,710, lead dropped $35 to $1,565, and tin declined $200 to $11,700. Zinc advanced $30 to $3,130.

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

Last Updated: February 6, 2007 04:46 EST

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