Nickel comes off 27-month highs; copper recovers

SYDNEY: London nickel slipped on Wednesday, losing steam after a rally of more than 15 per cent in three days, while London copper recovered towards two-month highs although gains were seen as short-lived.

China's economic activity showed across-the-board weakness in April, with data from output to investment and consumption all missing market expectations, sparking new calls for Beijing to ease policies to shore up growth.

"The copper price has got ahead of itself," said Helen Lau, a senior mining analyst at UOB-Kay Hian Securities, noting signs of weakness in China's economy. "Activity is slowing down and property new starts have also slowed. In the medium term, we will see the summer slow season starting from June through July and August. That's why we are not surprised to see investors use this weak data to take profits," she added.

Supporting copper prices, was a shutdown at a South Korean copper smelter. Eight workers were injured in an explosion on Tuesday at the smelter operated by metals group LS-Nikko in the South Korean city of Ulsan, the company said.

LME copper edged up by 0.4 per cent to $6,872 a tonne by 0720 GMT, climbing closer to a two-month top at $6,895 a tonne reached on Monday. The most-traded August copper contract on the Shanghai Futures Exchange erased early losses to climb by 0.5 per cent to 48,500 yuan ($7,800) a tonne.

In the nickel sector, Sumitomo Metal Mining Co Ltd, Japan's biggest nickel smelter, said there was an increasing risk it could cut production of key stainless steel ingredient ferronickel, amid growing concerns about ore shortages.

Since Indonesia banned unprocessed ore exports in January, prices of ore and of refined nickel have soared; in China, traders have held on to their stocks, while producers there and in Japan scramble for supplies.

Three-month nickel on the London Metal Exchange slipped by 1.7 per cent to $20,630 a tonne on Wednesday, having struck $21,625, its highest since February 2012, the session before.

BHP Billiton is in talks to sell its Australian nickel business, the top global miner said on Wednesday, in line with its aim of simplifying the company. In the global economy, US retail sales braked sharply in April after strong gains in the prior two months, but that did little to change views the economy was poised for faster growth this quarter.