Ample supply sends nickel to its lowest since 2009

Nickel hit its lowest price in nearly six years on Monday after faltering demand for stainless steel and worries that a new tax in Malaysia might push more metal onto the market dented sentiment. LME nickel dropped 1.8 percent to trade at $13,050 in official midday rings, its lowest since May 2009 and extending Friday's losses of 2.9 percent.
In Malaysia, which stores about 210,000 tonnes of nickel, or almost half of the LME's inventories, a new government tax may force owners to sell metal rather than bear the cost of transporting stocks to nearby LME locations, analysts said.
The LME has threatened to stop registering new metal from July if Malaysia does not clarify the impact of the new goods and services tax on metals trade and storage in its two bonded zones. Malaysian officials said they plan to reach a solution before the tax comes into force on Wednesday.
"Everything is pointing to a very soft physical market in nickel as there are no supply-side problems or issues to help it," said Robin Bhar, analyst at Societe Generale in London.
Demand for nickel pig iron in China did not pick up as strongly as expected after the Lunar New Year holidays, industry sources said last week, with stainless steel producers set for lower exports in the face of tariff barriers.
By contrast, LME copper recovered part of Friday's near 2 percent loss, trading up 0.5 percent in official rings at $6,086 a tonne. But buying from top consumer China has been tepid, blunted by a recent increase in prices.
"Until we see evidence of a sustained pick-up in Chinese industrial activity, we think there's very little upside," said analyst Joel Crane of Morgan Stanley in Melbourne.
Data due this week includes an official gauge of China's factory sector in March. Activity probably contracted for a third straight month, a Reuters poll showed, reinforcing expectations Beijing will have to step up policy easing to support economic growth.
Friday's key US jobs report will add to the seesaw debate over when the Federal Reserve will spring an interest rate increase.
In other base metals, aluminium was last bid up 0.1 percent in rings to $1,784 per tonne, while zinc was last bid up 0.4 percent to $2,090. Lead was last bid down 0.3 percent to $1,819, while tin traded flat in rings at $17,200.