Nickel prices fell nearly 4 percent on Monday, pressured by weakening demand for stainless steel in top metals consumer China, rising Chinese borrowing costs and Beijing's regulatory crackdown on risky financing. Chinese stocks fell sharply amid worries that rising borrowing costs will hit company profits and that fresh moves to reduce risks in the asset management industry could hit banks and millions of small investors.
"Some reports coming from China (indicate) stainless orders are weakening. Over the past couple of weeks questions from clients have gone from 'what are the benefits of electric vehicles (for nickel)' to 'how bad is China's demand'," said Colin Hamilton, head of commodities research at BMO Capital Markets. "China produced so much stainless in the third quarter they're having to cut back. I'd expect stainless production to be down relatively strongly in the fourth quarter," he added.
Stainless steel accounts for two thirds of nickel demand. London Metal Exchange nickel ended 3.9 percent down at $11,570 a tonne, having touched a one-week low of $11,565. Beijing will check local governments' investment in railway projects, the state planner said on Friday, amid official concerns that breakneck infrastructure spending is racking up too much debt. China's industrial companies weathered a broad government crackdown on financial risk as profits continued to surge last month, a stabilising factor for the world's second-biggest economy, which has started to cool slightly.
Zinc closed 1.4 percent down at $3,187, having touched a one-week low of $3,169.50. "On average, China has imported a good 45,000 tonnes of refined zinc and over 200,000 tonnes of zinc concentrate per month so far this year," Commerzbank said in a note. "This points to ample availability on the world market and in our opinion does not justify concerns about tight supply." Copper hit $7,024 a tonne, its highest in a month, before reversing to finish with a 0.9 percent decline at $6,942. Indonesia's Ministry of State-Owned Enterprises, tipped to oversee an acquisition of a majority stake in the local unit of Freeport-McMoRan Inc, has "no clear structure" yet for the deal.
Workers at BHP Billiton's Escondida copper mine in Chile ended a 24-hour strike on Friday but could down tools again this week over the company's planned layoffs. Escondida is the world's largest copper mine. Aluminium closed 0.1 percent up at $2,135, having touched its highest since early November. Lead finished down 0.6 percent at $2,465 and tin was up 0.1 percent at $19,525.
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