^[1]By Leia Michele Toovey- Exclusive to Nickel Investing News

London Metal Exchange nickel dropped by approximately five per cent to two week's low as the stronger greenback made the metal more expensive for holders of other currencies.

Nickel dropped by 4.7 per cent to US$19,300 a tonne, it's lowest since August 20, 2008. LME inventories rose 1,206 tonnes to a four-month high of 48,228 tonnes and the metal is down by 24 per cent this year as demand from stainless steel producers, who account for two thirds of global nickel consumption, has fallen short of expectations.

Nickel futures also traded lower on the MCX. Nickel September contract opened at Rs 870 as compared to its previous closing at Rs 871.80. Nickel October contract moved down by 1.72 per cent at Rs 868.50 a kg after opening at Rs 880. Similarly, nickel November contract was down 1.17 per cent at Rs 880 as against its previous closing at Rs 890.40 a kg.

China ^[2] is both the world's biggest consumer, and producer of nickel. Chinese recoverable nickel from pig iron was up in the January to July period, but is expected to be unchanged for the full year. While some steel prices reduced and iron ore prices fall, stainless steel output is still rising. However, according to a research report issued by RNCOS,  China is anticipated to increase its share in Global Nickel Consumption 31 percent by 2011. Nickel consumption in China will be supported by fast-paced urbanization across the country and increasing use of the metal in the industrial development sector. At present, the rapidly growing Chinese steel industry, which consumes nearly 40 per cent of the total nickel available in the country, is stimulating the nickel demand. Nickel consumption in China surged by 170 per cent between 2001 and 2006 to 0.23 million tonnes, making China the largest nickel consumer in the world.

Australian miner Kagara Ltd (KZL.AX) on Wednesday requested a temporary halt in the trading of its stock, pending an announcement to be made this Friday. The request follows a "substantial drilling intersection" at the lode, according to the company. Speculation is that the announcement will be a large increase in the size of its Lounge Lizard nickel deposit in west Australia. Kagara bought the Lounge Lizard deposit from Lionore Mining International, now part of Russia's Norilsk Nickel (GMKN.MMN) for  AU$25 million in December 2006. The potential to yield more nickel comes as analysts predict a slew of closures in the sector in response to sagging prices ^[3] for the stainless steel alloy, which are down around 60 per cent from record highs above $51,000 a tonne ($23 a pound) 16 months ago. Closures ^[4] have already hit some of the biggest miners, BHP Billiton Ltd (BHP.AX) has shut down its 100,000 tonne per year Kalgoorlie smelter in Australia for four months of repairs. Xstrata Plc (XTA.L) has suspended its Falcondo ferronickel operations in the Dominican Republic, while Australia's Minara Resources ^[5] Ltd (MR) was deferring nickel expansion plans, citing both high costs and low prices.

Victory Nickel Inc. (TSX:NI) has increased the value of its offer for  Independent Nickel Corp. (TSX:INI). Independent Nickel announced just last week that they recommended shareholders vote in favour of Victory Nickel's offer.  This recommendation was based on the results of an external review of Victory's offer to Independent Nickel. The new bid offers 1.1 share of Victory Nickel for each shares of Independent Nickel, up from one share. That will give current Independent shareholders about one-quarter of Victory's shares after the transaction. Based on Tuesday's closing stock prices, Victory's bid was worth 35.2 cents per share or $21.3 million - about the same immediately as after the initial offer was announced August 19. In the intervening weeks, the value of resource stocks generally has plummeted amid falling commodity prices.