(Recasts to focus on nickel's fall; updates prices by Asian

market close)

May 21 (Reuters) - Nickel declined on Thursday as

investors assessed the supply of the metal and a new policy of

top producer Indonesia to put exports of some nickel products

under state control.

The benchmark three-month nickel on the London Metal

Exchange declined 1.39% to $18,665 a metric ton as of 0800 GMT.

The most-active nickel contract on the Shanghai

Futures Exchange declined 1.23% to close at 142,770 yuan

($20,986.33) a ton.

Some details of the policy, announced by President Prabowo

Subianto on Wednesday, were unveiled on Thursday by officials of

the trade ministry and the chief executive of Indonesia's

sovereign wealth fund,Danantara. A unit of the fund will become

the sole exporter of palm oil, coal and ferroalloys as soon as

September 1.

Ferronickel, whose HS code covers nickel pig iron, will be

put under the oversight of the state export body. It is a key

feedstock for stainless steel and accounts for the majority of

Indonesia's nickel output.

Traders noted that nickel stocks SHFE are still

on the rise, and are at the highest since May 2017. LME nickel

inventories also ticked higher as of Tuesday.

Meanwhile, implementation of the new policy is in focus,

with some investors saying it could prove impossible to

implement as they question how a single company could manage

exports to a vast number of downstream buyers across the globe.

The U.S. dollar and oil ticked higher, as

President Donald Trump said the U.S. was willing to wait to get

the right peace deal with Iran in the final stagesof

negotiations, weighing on industrial metals led by copper.

London benchmark copper tumbled 1.21% to $13,490 a

ton, and the Shanghai most-active copper closed 0.38%

higher at 103,940 yuan, after a 1.97% rise earlier this session.

Elsewhere on the LME, aluminium dipped 0.28%, zinc

dropped 0.75%, lead nudged 0.08% higher and tin

slid 1.93%.

Among other SHFE metals, aluminium dropped 0.49%,

zinc rose 0.98%, lead added 1.07% and tin

gained 1.81%.

($1 = 6.8030 Chinese yuan renminbi)