Nickel retreats as traders await clarity on potential coordinated output cuts

Nickel pulled back on Friday despite reports that Chinese producers were considering coordinated output cuts at their Indonesian operations, as traders awaited clearer signals from companies on the scale and timing of any reductions. Three-month nickel on the London Metal Exchange fell 1.95% to $15,805 a metric ton as of 0330 GMT, giving back most of its gains from Wednesday's rally. The most-traded November nickel contract on the Shanghai Futures Exchange dropped 2.22% to 119,460 yuan ($17,903.87) a ton. Reuters reported on Thursday that Chinese producers in Indonesia were considering halving output of mixed hydroxide precipitate used to make electric vehicle battery chemicals, and cutting nickel pig iron, a stainless steel ingredient, by 20%. No final decision had been reached, and the size and duration of any cuts remained uncertain. Australia-listed Nickel Industries said producers at the Indonesia Morowali Industrial Park would coordinate cutbacks, without giving figures. Traders remained sceptical about whether the proposed cut would eventually materialise, and whether it would take into account reductions already underway across the industry for months, while waiting for clarity from companies involved to announce actual plans. Chinese broker Galaxy Futures said high inventories and weak demand were limiting nickel's rebound, with production schedules for nickel-based batteries easing and stainless steel demand falling short of seasonal expectations, adding that the market was waiting for the proposed cuts to materialise. Warehouse stocks remained at elevated levels, despite recent drops. LME nickel stocks stood at 280,674 tons as of Wednesday, while SHFE warehouse stocks held 106,648 tons as of October 16, according to both exchanges' latest stock report. The International Nickel Study Group last week forecast a small global surplus this year, reversing an earlier deficit forecast. Among other LME metals, copper gained 0.60%, zinc rose 0.44%, lead added 0.24% and aluminium was up 0.03%. Tin slipped 0.48%. On the SHFE, copper declined 0.41%, zinc fell 0.84% and tin dropped 1.97%. Aluminium rose 0.38%, while lead gained 0.15%. ($1 = 6.6723 Chinese yuan renminbi)