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Nickel falls as Citi sees Philippines audit 'underwhelming'

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Nickel led metals lower, retreating from its biggest weekly gain in almost three months, after Citigroup Inc said it expects fourth-quarter price declines and an "underwhelming" impact from the Philippines' mines audit due to be released this week.

[SHANGHAI] Nickel led metals lower, retreating from its biggest weekly gain in almost three months, after Citigroup Inc said it expects fourth-quarter price declines and an "underwhelming" impact from the Philippines' mines audit due to be released this week.

The metal used in stainless steel dropped as much as 1.4 per cent to US$10,510 a metric ton on the London Metal Exchange before trading at US$10,540 as of 10:58am in Shanghai. It surged 9.6 per cent last week, the most since July 1. On the Shanghai Futures Exchange, it fell 0.9 per cent.

The Philippines is shutting operations that fall short of environmental or welfare standards, threatening disruptions from the world's top miner of nickel ore and contributing to a 19 per cent rally this year. Those supply fears are misplaced, Citi said in a research note received Monday.

There are "few signs of ore or metal market tightness," analysts including Ed Morse wrote in the note. The bank expects five or six additional mines to be closed by the Philippines, which will be offset by increased ore shipments from the country's bigger miners and by Indonesia.

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Citi downgraded its price estimate for the fourth quarter by US$130 a ton to US$9,770, and to US$9,550 for next year.

Aluminum on the LME fell 1 per cent from a one-month high to US$1,620 a ton, with the US bank calling for "caution" on the metal due to a pick-up in Chinese output.

Copper declined 0.3 per cent after rising a fourth week, even as the bank said it remains "constructive" on the metal over the next 12 months.

Tin was little changed at US$19,630 a ton after rising to US$19,645 on Friday, the highest close since January 2015, as stockpiles on the LME slumped to their lowest since March.

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