Nickel down 4.5% today

Oil stabilized in the past two weeks but the commodity bust is far from over. Metals markets will be thinner this week with China on holiday and that sent nickel prices down $385 a tonne to $8160 in London.

That's lowest close in 12 years.

In 2007, nickel traded at more than $50,000/tonne. Last year it was the worst performer at the London Metals Exchange, down 40%. It's the worst performer again this year, down 9%.

In late 2015, it broke the 2008 lows and now it's threatening to embark on a fresh squeeze lower.

The story is similar in all commodities. The prices in 2007-2013 attracted waves of investment spurred by ultra-low rates. Now, massive supplies are hitting the market and overwhelming demand.

"Nickel is so dramatically oversupplied. We think there's over one million tonnes of nickel inventories around," analyst David Wilson at Citi told Reuters.

"We've also had very little in the way of production cuts in nickel. There've been a few Aussie mines closing, but it's all been a bit piecemeal rather than decisive production changes."

Reuters reports that the French government has pledge to support nickel mines in the Pacific territory of New Caledonia; subsidizing production rather than allowing supply to run off.

Look for the same themes to play out right across the commodity spectrum. There's a standoff where no one wants to cut production as they wait for 'the other guy' to go bust.