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Nickel Unable to Maintain Impressive Rally

May 15, 2014 at 19:42 by Vladimir Vyun

Nickel dropped today, demonstrating the biggest decline since 2011 and reversing the recent rally. The metal has gained 56 percent this year. Analysts speculated that such levels are unsustainable.

Prices rallied 36 percent since the end of January as Indonesia introduced ore-export ban. Metal also gained on speculations that the West may implement additional sanctions against Russia, the second biggest producer of refined nickel, for its involvement in the political crisis of Ukraine.

Nickel inventories tracked by the London Metal Exchange expanded 6.8 percent in 2014, suggesting that Indonesia’s export ban has not disrupted global production. With growing stockpiles and signs that China, the second biggest world economy, has ample reserves of the metal it was hard for nickel to maintain its high prices.

Contract for delivery of nickel in three months slumped as much as 6.4 percent to $18,750 per metric ton on LME today, demonstrating the biggest drop since September 2011.

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