Nickel failed to sustain the biggest weekly rally since October on speculation supply cuts still aren’t enough to erode a surplus.

Prices slumped to a 12-year low on January 16 and production is unprofitable at more than two-thirds of mines around the world. While there have been announcements of output cuts and risks to supply in Australia and Brazil, JPMorgan Chase & Co expects a glut of 56 000 metric tons this year and recommends shorting the metal, it said in a report e-mailed on Monday.

“Sentiment among speculative financial investors still remains very pessimistic,” Commerzbank analysts including Daniel Briesemann wrote in a note on Monday. “This is still clearly preventing any more pronounced price recovery at present.”

Nickel for delivery in three months fell as much as 1.5% and was 0.6% lower at $8 650 a ton by 11:30am on the London Metal Exchange. The metal gained 3.6% last week, even as combined inventories tracked by exchanges in London and Shanghai reached the highest since at least April.

A 56000-ton surplus would equal less than two week’s worth of global demand, according to Morgan Stanley estimates.

Copper rose 0.3% to $4 457 a ton on the LME, after earlier falling as much as 0.6%. Aluminum, lead and tin declined, while zinc gained.

Sluggish demand, along with rising risks in both developed markets and China, make it likely that copper will drop to fresh lows this year, Dane Davis, an analyst at Barclays, said in a note e-mailed Monday.

The FTSE 350 Mining Index increased 0.7%. Glencore led gains, rising 5.3%.

• [Editor:Juan]