Activity in LME stocks has slowed, with both the inflows and outflows reducinglast week, although we feel the drop in withdrawals will only be temporary ascancelled warrants continue to climb; they stand at 148,068 tonnes, so are stilltrending higher. We think withdrawals are mainly due to metal being shippedto China to deliver against SHFE short positions, rather than going there to beconsumed. For now stainless steel mills are likely to be turning to stainless steelscrap and ferro-nickel to replace shortfalls in NPI, but in time they will likely turn torefined nickel too. Regardless of what the nickel is being used for, if a downwardtrend in LME nickel stocks gathers momentum then that can only help underpinnickel prices, especially if stainless steel production recovers as expected later thisyear to reach a new high in 2015.
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