* Vale supply concerns boost nickel
* LME nickel stocks down
* GRAPHIC-2019 asset returns: (Adds closing prices, updates positions)By Zandi ShabalalaLONDON, Feb 6 (Reuters) - Nickel hit its highest in morethan four months on Wednesday on concerns that a force majeureby Brazil's Vale on some iron ore contracts could lead torestrictions in its nickel supply.Benchmark nickel on the London Metal Exchange (LME) ended 0.9 percent lower at $12,925 per tonne, after it touched$13,350, its highest since Aug. 31, as the dollar firmed.A Brazilian court forced production to stop at Vale's iron ore mine after a tailings dam burst last month,killing more than 300 people and compelling Vale to tell
clients it could not deliver on some iron ore contracts. "The strength in nickel has been largely on worries thatVale's nickel supply might be impacted after the iron ore forcemajeure," said ING commodities strategist Warren Patterson."Whether that is justified though is the question, maybe themarket is getting ahead of itself on the nickel side."Vale is the world's top producer of nickel, which is mainlyused in stainless steel.
POSITIONS: Traders said nickel and other metals were alsobenefiting from an unwinding in short positions. The marketended on Monday with a net long position amounting to 3.8percent of open interest, broker Marex Spectron said.STOCKS: Total inventories of nickel in warehouses registeredwith the LME stood at 200,754 tonnes, down about 45 percentsince the beginning of 2018.HOLDINGS: Exacerbating concerns about the scarcity of themetal, a single entity held between 50 and 79 percent of LMEnickel warrants.TRADE TALKS: Senior U.S. and Chinese officials are poised tostart another round of trade talks in Beijing next week to pushfor a deal to protect American intellectual property and avert aMarch 2 increase in U.S. tariffs on Chinese goods, two peoplefamiliar with the plans said on Tuesday. FACTORY ACTIVITY: China's factory activity shrank by themost in almost three years in January as new orders slumped andoutput fell, a private survey showed, reinforcing fears that aslowdown in the world's second largest economy was deepening. LEAD: Lead prices may get a boost as environmentalcrackdowns on smelters in China curb output in the world'sbiggest market for the battery metal as inventories tumble. OTHER METALS: Copper closed 0.8 percent higher at$6,279 per tonne after touching a two-month high and aluminium eased 0.8 percent to $1,907, having scaled its highestsince Dec. 24.Zinc retreated from a seven-month high touched onTuesday, ending 1.3 percent lower at $2,704, lead slipped 0.6 percent to $2,090 while tin ended 0.7percent higher at $21,000.<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Top Base and Precious Metals Analysis - GFMS ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Additional reporting by Naveen Thukral in SINGAPOREEditing by David Evans and Edmund Blair)
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