Nickel prices are hovering at 12-year low and forcing the metal manufacturers to cut down on production and supply levels.

Manufacturers of nickel pig iron to refined metals are suffering from the lower prices in the global markets. The slowdown in China's economy has resulted in glut putting more pressure on metal prices. 

Nickel makers including Jinchuan Group Co, China's largest supplier of refined metal, are meeting in Shanghai to discuss the future course of action. Chinese zinc manufacturers are in the process of cutting down supply levels.

According to reports by Bloomberg, Nickel is the worst performer on London Metal Exchange (LME) this year so far as the metal price is trading at the lowest level since 2003.

The slowdown in China's economy has resulted in glut putting more pressure on metal prices.

Adding to the slump in the industry, half of the global production is loss-making, according to PT Vale Indonesia, a part of Vale SA. 

The slump in nickel prices impacted the entire metals complex this year, as reported by Reuters, and sluggish steel industry is also weighing on the metal. The slowdown in the world's largest consumer China is forcing prices lower in the global commodities markets.

The transition of China into service-driven economy from manufacturing-led growth is also further putting pressure on the metals.

Nickel and zinc are largely consumed by Chinese steel industry and these two metals have been reeling under pressure while copper, lead and aluminum prices are hovering at six-year lows.

The poor outlook for Chinese steel industry is further sending jitters to the nickel makers.

Glencore Plc has also reduced zinc supply by one-third this prompted a 10 percent rise in prices. Chinese producers have slashed production cuts for next year also.

However, Goldman Sachs opines that these levels of cuts may not be sufficient to push prices upwards. It suggests that Chinese demand should improve for boosting metal prices.

Standard Chartered Plc said the plan by Chinese zinc producers to reduce supply is "short on specifics and shouldn't be taken at face value." 

According to the Metal Bulletin, Nickel prices dropped continuously for three weeks in a row and rebounded by over seven percent. Nickel futures gained 1.5 percent to $8,900 a metric ton on London Metal Exchange and traded at $8,860 in Shanghai.

Recently, nickel price dropped to $8,145 a ton, lowest in over 10 years before rising 5.7 percent on the news that major nickel makers are cutting down production levels.  

Meanwhile, nickel, zinc and copper prices recovered. Chinese regulators have started probing into the short-selling in metals. Market observers say that funds were covering their short positions ahead of US Thanksgiving and this may continue till Christmas.