October 27, 2017 / 7:37 AM / in a year

METALS-Nickel falls as China cuts steel capacity, dollar climbs

 (Updates prices)
    By James Regan
    SYDNEY, Oct 27 (Reuters) - Chinese nickel futures dropped on
Friday in line with steel prices and were on track to end the
week sharply lower, with added pressure coming from a resurgent
    China is stepping up efforts to cut industrial production to
combat smog, hitting demand for nickel, which is used to make
stainless steel.
    China's government said on Friday that it had met its target
for cutting steel capacity this year, with further curbs
expected this winter when smog is typically heaviest. The
country is the world's biggest consumer of nickel.    
    * SHFE NICKEL: The most-traded nickel contract on the
Shanghai Futures Exchange had dropped 3.2 percent to   
  92,540 yuan ($13,908.47) a tonne by 0712 GMT. The contract was
1.5 percent lower on the week.
    * LME NICKEL: Three-month London Metal Exchange nickel
 was down 2 percent at $11,500 a tonne. 
    * STEEL DOWN: The most active rebar contract on the Shanghai
Futures Exchange was off 2.4 percent, down for a second
straight session.  
    * DOLLAR: Metals were hit by a stronger dollar after the
European Central Bank extended its bond purchases and reduced
the chances that it would hike interest rates in 2018.
    * LME COPPER: Three-month LME copper backtracked 1.3
percent to $6,898 a tonne, extending losses from the previous
session to hit the lowest in almost two weeks at $6,892 a tonne.
    * SHANGHAI COPPER: The most-traded ShFE copper contract
 was off 1.6 percent.
    * LME ALUMINIUM: Three-month LME aluminium fell 1.5
percent after hitting a five-year-plus peak overnight as metal
capacity cuts at Chinese smelters during the winter draws
closer. Signs of a supply shortfall as LME inventories in London
fell to a nine-year low also lent support.
    * SHANGHAI ALUMINIUM: ShFE aluminium was down 1.1
percent, mostly holding gains from the previous session that saw
the contract hit its highest in more than a week. 
    "Support remained for aluminium as investors expect to see
further tightness as Chinese producers cut production heading
into winter," ANZ Bank said. 
    * INVENTORIES: Total stocks of aluminium in LME-registered
warehouses fell 3,975 tonnes to 1.2 million tonnes, the lowest
since September 2008 MALSTX-TOTAL. But Shanghai stocks have
been steadily rising to an all-time high of 615,370 tonnes as of
Oct. 20. AL-STX-SGH

 BASE METALS PRICES            0711 GMT               
 Three month LME copper                         6903.5
 Most active ShFE copper                         53990
 Three month LME                                  2166
 Most active ShFE                                16260
 Three month LME zinc                           3174.5
 Most active ShFE zinc                           25415
 Three month LME lead                             2450
 Most active ShFE lead                           18635
 Three month LME nickel                          11515
 Most active ShFE nickel                         92540
 Three month LME tin                             19810
 Most active ShFE tin                           143700
 BASE METALS ARBITRAGE                                
 LME/SHFE COPPER           LMESHFCUc3           245.99
 LME/SHFE ALUMINIUM        LMESHFALc3          -470.21
 LME/SHFE ZINC             LMESHFZNc3           406.88
 LME/SHFE LEAD             LMESHFPBc3         -1052.87
 LME/SHFE NICKEL           LMESHFNIc3          2023.15

($1 = 6.6535 Chinese yuan)

 (Reporting by James Regan, Additional reporting by Melanie
Burton; Editing by Joseph Radford and Sherry Jacob-Phillips)
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