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. Last Updated: 07/27/2016

Nickel Prices Plunge As Siberian Ore Moves

LONDON -- Nickel prices fell sharply Wednesday as metal stockpiled at a Siberian mine in the Arctic Circle during the winter started to pour into the world market.


On the London Metal Exchange prices touched a three-month low of $5,760 a ton, down $110 from Tuesday.


Traders said exports would increase over the next few months from Russia's huge Norilsk mine, 2,900 kilometers northeast of Moscow.


"Russian production and export levels to the West are a major uncertainty in the nickel market," said David Williamson, of mining analysts David Williamson Associates.


"It is estimated that exports from this source are expected to rise to 70,000 tons in the second half of 1994, against 40,000 tons in the first half," Williamson added.


Before the break-up of the Soviet Union, nuclear-powered ice-breakers would clear a path through the Arctic ice to ensure a steady supply even during winter.


Now, the exporters prefer to save their transport costs and hold on to the metal until the winter is over. Flooding as the ice melts around the port of Dudinka means another couple of months until late July before nickel can start moving to overseas markets.


Nickel, which is mainly used in the manufacture of stainless steel, has lost 16 percent of its value since the end of May but is still well above the lows reached late last year.


"Short-term fundamentals for nickel have turned from mildly positive to mildly bearish in the summer quarter," said metal researcher Angus MacMillan of LME brokers Billiton-Enthoven, adding that "stocks were expected to rise during this period."


Traders said Wednesday's drop, in a market already worried by the increased shipments from Russia, was sparked by news that stocks had risen in LME-registered warehouses.


MacMillan said if prices failed to hold around $5,800, they could fall as low as $5,600.


LME warehouse stocks now stand at 135,660 tons, near record highs. Three years ago there was just 2,500 tons in store.