Please read the article and answer the following questions: 1) Based on the info
ID: 1168467 • Letter: P
Question
Please read the article and answer the following questions:
1) Based on the information provided in the article, how elastic is the demand for nickel?
2) Bart Melek was quoted indicating that "Nickel is more responsive or elastic to worries about demand compared to other base metals." In your own words, what does that mean?
Please write a short document of a minimum of 100 words
Nickel Poised for Biggest Loss in Three Weeks on Demand Concerns
Nickel dropped the most in three weeks, leading declines in base metals, as further signs of an economic slowdown in China heightened demand concerns in the Asian nation, the world’s largest consumer.
Industrial output in August fell short of economists’ forecasts, while fixed-asset investment in the first eight months increased at the slowest pace since 2000, government data released Sunday showed. Nickel, used in stainless steel, is heading for the biggest annual drop since 2008 amid prospects for excess supply as growth in China remains stuck below the government’s target of about 7 percent this year.
“We’ve seen pretty lousy data” from China, Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview. Nickel “is more responsive or elastic to worries about demand” compared to other base metals, he said.
Nickel for delivery in three months fell 3.7 percent to settle at $9,920 a metric ton at 5:50 p.m. on the London Metal Exchange, the biggest loss since Aug. 24. The commodity has slumped 35 percent in 2015.
In August, Macquarie Group Ltd. switched its forecast of a 30,000-ton deficit this year to a 15,000-ton surplus, mainly due to lower-than-expected demand from China, the world’s biggest producer of stainless steel.
Steelmakers also extended losses, with an index of North American producers retreating as much as 3.9 percent.
Zinc, lead, aluminum and copper also declined on the LME, while tin rose.
On the Comex in New York, copper futures for December delivery slid 2 percent to $2.4055 a pound.
Shares of Glencore Plc, the third-biggest copper-mining company in 2014, fell as much as 6.4 percent in London trading. The Baar, Switzerland-based company has dropped by more than half this year.
“Chinese data, especially the August industrial production, has been enough to unnerve investors,” Malcolm Freeman, a director of West Malling, England-based brokerage Kingdom Futures Ltd., said by e-mail.
Explanation / Answer
Ans:
2)
Chinese economy remains stuck below government target
Glencore shares tumble in London trading as copper slides
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Nickel dropped the most in three weeks, leading declines in base metals, as further signs of an economic slowdown in China heightened demand concerns in the Asian nation, the world’s largest consumer.
Industrial output in August fell short of economists’ forecasts, while fixed-asset investment in the first eight months increased at the slowest pace since 2000, government data released Sunday showed. Nickel, used in stainless steel, is heading for the biggest annual drop since 2008 amid prospects for excess supply as growth in China remains stuck below the government’s target of about 7 percent this year.
“We’ve seen pretty lousy data” from China, Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview. Nickel “is more responsive or elastic to worries about demand” compared to other base metals, he said.
Nickel for delivery in three months fell 3.7 percent to settle at $9,920 a metric ton at 5:50 p.m. on the London Metal Exchange, the biggest loss since Aug. 24. The commodity has slumped 35 percent in 2015.
In August, Macquarie Group Ltd. switched its forecast of a 30,000-ton deficit this year to a 15,000-ton surplus, mainly due to lower-than-expected demand from China, the world’s biggest producer of stainless steel.
Steelmakers also extended losses, with an index of North American producers retreating as much as 3.9 percent.
Zinc, lead, aluminum and copper also declined on the LME, while tin rose.
On the Comex in New York, copper futures for December delivery slid 2 percent to $2.4055 a pound.
Shares of Glencore Plc, the third-biggest copper-mining company in 2014, fell as much as 6.4 percent in London trading. The Baar, Switzerland-based company has dropped by more than half this year.
“Chinese data, especially the August industrial production, has been enough to unnerve investors,” Malcolm Freeman, a director of West Malling, England-based brokerage Kingdom Futures Ltd., said by e-mail.
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