Shanghai nickel futures tumbled more than 4 percent on Tuesday to their lowest since mid-October as reforms in China threaten steel-intensive infrastructure projects.
ANZ Bank warned that weakness in the stainless steel sector continues to override any exuberance over electric vehicles and demand for nickel-rich batteries.
Stainless steel production accounts for two thirds of nickel demand.
Falls in equity markets have also raised concerns that liquidity will impact investor appetite in key commodity markets, ANZ said.
Investor confidence in China has been dented by rising bond yields as Beijing stepped up its crackdown on shadow banking and other risky forms of financing. Higher borrowing costs threaten to squeeze corporate profits.
The dour mood looks set to ripple across global markets, with both FTSE futures and S&P E-mini futures edging down.
* SHANGHAI NICKEL: The most-traded nickel contract on the Shanghai Futures Exchange slipped as low as $91,340 yuan a tonne shortly before the close before recovering slightly to end 3.78 percent down at 92,110 yuan ($13,953.31). The contract has now retreated by more than 11 percent from its one-year peak hit on Nov. 6.
* LONDON NICKEL: Three-month nickel on the London Metal Exchange fell modestly to $11,400 a tonne, following a 3.9-percent loss in the previous session.
* BHP TARGETS: Top global miner BHP Billiton said on Tuesday it would drive further cost cuts across its Australian business, and forecast strong price support from China for steelmaking raw materials.
* TIGHT LEAD: The International Lead and Zinc Study Group (ILZSG) last month made a significant revision to its outlook for the lead market this year. The market is now expected to be in a supply deficit of around 125,000 tonnes ahead of another 48,000-tonne deficit next year.
* POSTPONEMENT: A court hearing for a challenge by South Africa’s mining industry to revisions to a sector charter which include raising levels of black ownership has been postponed to February from December.
* SHANGHAI COPPER: ShFE copper was 1.51-percent lower, with LME three-month copper off 1 percent at $6,868 a tonne.