Market and product
Nickel drops to near two-month low
* Shanghai copper premiums steady
* Chinese economy concerns continue to weigh on metals (Updates with closing prices)
By Eric Onstad and Harpreet Bhal
LONDON, June 12 (Reuters) - Nickel sank to its lowest price in about two months on Thursday on persistent profit-taking after months of rallying on an Indonesian ban on ore exports in January.
Copper fell to its lowest in 1-1/2 months on caution over a Chinese investigation into metals financing that could impact metals trade and release metal onto the market.
Three-month nickel on the London Metal Exchange (LME) hit a session low of $17,700 a tonne, the weakest since April 16, before paring losses to close at $18,000 a tonne, down 1.7 percent.
Nickel, up 30 percent so far in 2014, has been by far the best performing base metal after top producer Indonesia imposed a ban on shipments of unprocessed ore in January. It hit a 27-month peak of $21,625 a tonne on May 13.
Deutsche Bank analyst Grant Sporre expects further weakness in nickel since stocks of ore and refined metal have not been eroded as much as has been discounted in the price.
"The nickel price had run ahead of fundamentals ... For the very near term, the next month or so, we've still got some downside risk, we could drift towards $17,000," he said.
"But as we look to Q4, the market will tighten up again and the real fundamentals come to the fore, so we could head back above $20,000."
Analysts at Commerzbank also expect more falls for nickel in the near term.
"Short-term-oriented financial investors have been taking profits for a number of weeks now. This is clear from the open interest which from its record high in May has now decreased by 8.5 percent to 228,000 contracts," the bank said.
"In our opinion, the current momentum suggests that the correction will continue in the short term."
