Nickel settled down -5.26% at 1178.70 posted the biggest drop since December 2011 as some investors deemed a surge to a two-year high to be excessive amid signs of sufficient supply. Earlier this week LME Nickel crossed $21,625, the highest since Feb. 10, 2012. The price has surged 51 percent this year after exports of raw ore were banned in January by Indonesia, the largest miner of the metal, banned exports of unprocessed ores in January 2014, while Russia, the second biggest miner, may face severe sanctions from the West as situation in Ukraine remains tense. From the negative side, nickel inventories at the LME warehouses stood 55% higher compared to the same period last year. While since Tuesday Nickel prices in London fell for the first time in two weeks, snapping the longest rally since 2010, as industrial metals slumped amid concern that the economy will falter in China, the world’s biggest consumer. A report due probably will show China’s gross domestic product expanded 1.5 percent in the first quarter, down from 1.8 percent in the fourth quarter. Still Vale’s 40ktpa nickel plant in New Caledonia has remained suspended after an accidental spill closed the plant on 7 May. Pressure can be seen in today's session also as the market is lacked of solid news. LME nickel prices opened at USD 20,828/mt, touching USD 21,158/mt before falling due to selling pressure, hovering around the 5-day moving average. Technically market is under long liquidation as market has witnessed drop in open interest by -7.17% to settled at 9736 while prices down -65.4 rupee, now Nickel is getting support at 1152.2 and below same could see a test of 1125.6 level, And resistance is now likely to be seen at 1222.7, a move above could see prices testing 1266.6.

Trading Ideas:

Nickel trading range for the day is 1125.6-1266.6.

Nickel dropped as some investors deemed a surge to a two-year high to be excessive amid signs of sufficient supply.

Sumitomo Metal Mining Co Ltd, said there was an increasing risk it could cut production of ferronickel, amid growing concerns about ore shortages.

LME nickel inventories have barely declined from record levels and up 56 percent over the past 12 months.