(Updates with closing prices)By Peter HobsonLONDON, Jan 16 (Reuters) - Nickel touched a 10-week high onWednesday as falling stockpiles and a tightening of time spreadssuggested an undersupplied market.
Benchmark nickel on the London Metal Exchange (LME)closed down 0.4 percent at $11,630 a tonne after reaching$11,770, its highest level since Nov. 8.
The stainless steel ingredient is up around 10 percent froma 15-month low on Jan. 2. It has been caught up in a broaderslide in industrial metals because of fears that China'seconomic growth is slowing.Stockpiles in exchange warehouses are near multi-year lowsand the price of cash nickel surged this week compared withcontracts for later delivery, suggesting a shortage of nearbymaterial.
But Citibank analyst Oliver Nugent said the tighter spreadswere likely due to temporary factors related to the expiry of anLME monthly nickel futures contract on Wednesday.
"This is probably more a feature of a technical imbalance oflongs and shorts around a key expiry than it is a reflection ofa tightening in nickel's fundamentals," he said.The nickel market will likely be fairly balanced in 2019after a small deficit of 40,000 tonnes in 2018, he added,
predicting prices around $11,500 at the end of this year.
STOCKS: Nickel stocks in LME-registered warehouses at around200,000 tonnes are down from more than 360,000 tonnes at thestart of 2018 and at their lowest level since mid-2013. Nugent said the drawdowns were partly due to metal beingmoved to non-exchange warehouses, rather than because it hasbeen consumed.
SPREADS: The discount of cash nickel compared to three-monthmetal rose to $67 from $9, which was the smallest discount innearly two years. But at $67 the discount remains below recentlevels of around $80 to $90. WARRANTS/POSITIONS: Exacerbating a squeeze on the LME, asingle entity held between 40 and 49 percent of nickel warrantsand there were large holders of long and short positions in theJanuary futures contract.COLUMN: Flash LME nickel squeeze may be a taste of things tocome: Andy Home CHINA: Battling a slowdown that could curtail demand formetals, China signalled more stimulus measures in the near termas it aims to achieve "a good start to 2019". RUSAL: The U.S. Senate voted to advance a resolutiondisapproving of a plan to ease sanctions on Russian companiesincluding Rusal, the biggest aluminium producer outside China. ALUNORTE: Aluminium maker Norsk Hydro said the Brazilianstate of Para had lifted a production embargo on its Alunortealumina facility, the world's largest refinery of the aluminiumingredient. OTHER METALS: Copper finished 0.8 percent higher at$5,970 a tonne, aluminium ended up 0.7 percent at $1,859a tonne, zinc rose 1.7 percent to $2,497 a tonne, lead gained 0.4 percent to $1,975 a tonne and tin closed down 0.5 percent at $20,575 a tonne.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Top Base and Precious Metals Analysis - GFMS ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Additional reporting by Tom DalyEditing by Louise Heavens and Edmund Blair)