(Updates with closing prices)By Peter HobsonLONDON, July 19 (Reuters) - Nickel prices fell on Friday asa two-week explosion of buying which helped push the metal usedin stainless steel to its highest in more than a year appearedto run out of steam.
Copper meanwhile surged to a two-month high as investorsramped up bets that U.S. interest rates will fall.Benchmark nickel on the London Metal Exchange (LME)ended down 0.7% at $14,750 a tonne, but still up more than 9%this week.Prices on Thursday touched $15,115, the highest since June2018 and up a massive 20% in just two weeks.
"The rally was driven by technical and speculative buying,"said Commerzbank analyst Daniel Briesemann, predicting thatprices would give back most of the gains.
A supply deficit, low stockpiles, solid stainless steelproduction and the likelihood of future demand for nickel inrechargeable batteries meant prices should eventually rise, hesaid, although he added: "Not now, and not to this extent."
INTEREST RATES: Two influential U.S. Federal Reserveofficials on Thursday sharpened their public case for acting,quickly if needed, to support the U.S. economy. Lower interest rates tend to push commodity prices higherbecause they mean lower inventory financing costs and raiseappetite for riskier assets.GLOBAL GROWTH: Rate cut bets and rallying equity and bondmarkets are feeding into a gradual loosening of financial marketconditions that could potentially send world growth tickinghigher by the end of the year. TRADE WAR: U.S. and Chinese officials spoke by telephone onThursday as the two countries seek to end a year-long trade war,with U.S. Treasury Secretary Steven Mnuchin suggesting in-persontalks could follow. The trade dispute has sent industrial metals prices sharplylower because investors fear it will damage demand.
NICKEL STOCKS: Headline stocks in LME-registered warehouses,at 147,942 tonnes, have slid from more than 450,000 tonnes in2016 and are the lowest in 6-1/2 years. CHINESE BUYING: Chinese firm Tsingshan Holding Group hasbeen buying large quantities nickel on the LME to supplement itsown output, two sources familiar with the matter told Reuters.
INDONESIA: Nickel prices were supported this week by anIndonesian mining ministry official reiterating that a ban onthe export of raw ore exports would be enforced by 2022. Fear of the ban is unfounded, writes Reuters columnist AndyHome. COPPER: LME copper finished up 1.4% at $6,065 atonne after touching $6,170.50, the highest since May 10. It wasup more than 2% this week.
OTHER METALS: Aluminium closed down 0.3% at $1,848 atonne, zinc fell 1.6% to $2,425 and lead rose0.1% to $2,051. Tin did not trade in closing rings butwas bid down 0.3% to $17,800.
(Reporting by Peter Hobson; Additional reporting by Tom Daly;Editing by Jan Harvey and Jason Neely)