Nickel may drop 8 percent in the second quarter, eroding its lead as this year's best-performing metal, on concern that demand won't accelerate fast enough to drain stockpiles, a survey of analysts showed.
        Prices will average $20,944 a metric ton in the next quarter, down from yesterday's $22,670 close, according to the median in a Bloomberg survey of 13 analysts. Nickel rose 23 percent on the London Metal Exchange since January, extending last year's 58 percent jump.
        The metal is having its best start to a year since 2007 as stainless-steel output, the biggest source of demand, exceeds analysts' expectations. That advance may falter as supply from new mines adds to stockpiles already at more than three times the five-year average, the analysts said.
        "Inventories are incredibly high and when the supply side starts to come back on, that means that the upside is very limited," said Dan Smith, an analyst at Standard Chartered Plc in London. He expects a second-quarter average of $16,000.
        Vale SA, the world's second-biggest producer, said on March 16 that its Goro mine in New Caledonia would produce the first metal this month or next. New mine supply will likely mean production exceeds demand from next year, according to researcher Brook Hunt, a Wood Mackenzie company.
        Supply may also expand as Rio de Janeiro-based Vale seeks to restore output from its operations in Sudbury, Ontario. Vale's Canadian operations produce about 150,000 tons of nickel a year, according to Barclays Capital, which estimates global output this year at about 1.4 million tons.
        The rally since prices bottomed at $9,250 a ton a year ago may also spur producers to restart idled capacity, the analysts said.