Friday, May 17, 2024

Metals – Nickel sinks to 11-month low amid rising fears of global credit crunch

LONDON (Thomson Financial) – Nickel sank to its cheapest price since last September while aluminium hit a ten-month low amid rising fears of a global credit crunch and as overbearing risk aversion continued to weigh on sentiment.

Another equity rout today sparked a bout of risk aversion, also seen in other risky assets this morning with precious metals, oil and gas all down too.

‘We expect this environment to result in further volatility for base metals prices, with day-to-day direction taken from the financial markets, which are looking weak again,’ said Barclays Capital analysts. ‘Weakness in the financial markets is a downside risk to base metals and prices could fall further in the short term.’

Nickel shed almost 5 pct, and is now down more than 50 pct since striking an historic high of 51,800 usd just three months ago.

By 9.42 am, nickel for three-month delivery had dipped to 25,350 usd against 26,500 usd at the close yesterday.
Nickel earlier hit an intraday low of 25,150 usd.

Demand destruction with prices at sky high levels earlier this year, higher supply and lower usage by stainless steel manufacturers who had relied on the metal knocked the price, while recent broader economic woes have exacerbated the grey metal’s fall.

Aluminium, meanwhile, sank to a ten-month low of 2,500 usd earlier.

Elsewhere, copper, often seen as the base metal board leader, was also engulfed by risk aversion while a daily report from the LME earlier saying inventory rose 3,300 tonnes to 119,350 tonnes exacerbated the red metal’s fall.

‘Copper looks on track to test support towards 7,000 usd. Supply disruptions and robust demand side influences are taking a back seat for now and further short selling or long liquidation is likely,’ said JP Morgan analyst Michael Jansen.

Copper was down nearly 4 pct at 7,039 usd against 7,315 at the close yesterday.

Among other metals, lead slid to 2,875 usd from 2,955 usd.

Zinc eased to 3,135 usd from 3,230 usd, and aluminium dropped to 2,497 usd from 2,543 usd. Tin, the only metal to post a modest gain, rose to 13,950 usd from 13,850 usd.



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Sam Allcock
Sam Allcock
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