Nickel was sharply lower on Thursday and led a retreat for industrial metals prices as the demand forecast-driven rally of last week began to fade.
Production of the metal, used in the manufacture of stainless steel, has ramped up this year on expectations that demand will soar from producers of electric vehicles, where nickel is used in lithium-ion batteries.
Indeed, global nickel production was expected to come out of negative territory in 2017 for the first time since 2013, and world nickel output is forecast to rise by an annual average of 3.4% until 2021, Fitch Group reported earlier this year.
A Morgan Stanley report on Thursday said the market was ignoring downside risks from developments in Indonesia - which resumed exports in the summer after a three-year ban - and the Philippines. Instead, the broker said, the market was too focused on likely future demand from electric vehicles.
"Producing NiSO (nickel sulphate) isn't particularly challenging or costly and we see near-term downside risk to the price," it added.
China steel exports
Nickel prices were also feeling some impact from data this week showing China's net exports of steel fell 39% in October as Beijing authorities clamp down on heavily-polluting industries.
The price of three-month nickel in London fell 3.64% to $12,237.50 a tonne.
Other industrial metals were also lower on Thursday. Copper fell 1.08% to $6,776.75 a tonne, zinc lost 0.96% to $3,154 a tonne and aluminium shed 0.88% to $2,085.25 a tonne.