Nickel has fallen to a 6-year low on the London Metal Exchange, as prices have broken a key support level.

The monthly Stainless MMI® registered a value of 72 in April, a decrease of 7.7% from 78 in March. Stainless steel prices are falling along with their key alloying metal.

Those traders that supported the metal price from declining further have now changed their minds. This simply means that the market sentiment has changed. Selling pressure has overcome buying power and, without making any predictions, nickel is now more vulnerable to further declines.

Two factors helped to change the market sentiment:

• The expected deficit that Indonesia's export ban would create has failed that to materialize. Indonesian supply was replaced by increased supply from the Philippines, up 23% in 2014 from a year before. Moreover, as my colleague Stuart Burns pointed out. Chinese demand dropped from 909,000 mt in 2013 to 761,000 mt in 2014, despite a 9% increase in output of stainless steel.
• A bearish commodity environment, a strong dollar and low oil prices are punishing nickel prices. Not just nickel but by looking at the performance of other base metals, it was clear that a bear looms.