METALS-Nickel firms as plant closure amplifies supply fears

* GRAPHIC-2019 asset returns: (Adds closing prices, ING comment)

LONDON, Oct 24 (Reuters) - Nickel touched a one-week high on Thursday after Papua New Guinea ordered the closure of a nickel processing plant over its failure to take remedial action after a slurry spill, intensifying supply concerns.

The plant owned by Metallurgical Corp of China (MCC) produced nickel hydroxide containing 16,429 tonnes of nickel and 1,497 tonnes of cobalt in the first half of 2019, according to MCC.

Benchmark nickel on the London Metal Exchange (LME)ended 1.6% higher at $16,860 a tonne, after touching its highest since Oct. 16.

“The shutdown at the plant comes at a time when people are potentially factoring in a supply shortfall in 2020 with the Indonesia ban coming into place,” said Capital Economics analyst Kieran Clancy.

Indonesia, the world’s top nickel ore supplier, said in September that it will stop ore exports in 2020, pushing forward a ban by two years and lifting prices.

NICKEL: Inventories of nickel in LME-registered warehouses fell 3,894 tonnes, or about 5%, to 79,800 tonnes, the lowest since January 2009. Total stocks have halved in the past month. MNISTX-TOTAL

The nickel cash to three-month spread remained in a contango after touching a premium of more than $200 a tonne this month as traders anticipated metal returning to the exchange. CMNI0-3

ING said nickel’s physical indicators - including stainless steel overhang and weak premiums - pointed to weak demand and “suggest a disconnect between the recent strength on the LME and the physical market, implying a correction or even crash is inevitable”.

FLOOR PRICE: Indonesia’s mining ministry is revising a rule that governs the domestic price of nickel ore to ensure smelters follow government benchmark prices, a ministry official told Reuters.

NICKEL BALANCE: Global demand for nickel is expected to increase to 2.52 million tonnes in 2020, with output rising to 2.48 million tonnes, the International Nickel Study Group said.

COPPER: Normal operations resumed at top copper producer Codelco after workers struck a deal with the government after staging a one-day strike in solidarity with a nationwide protest in Chile.

MINE BAN: The Philippines mining regulator has recommended lifting a three-year suspension of the environmental permit for what could be one of the world’s largest copper mines, the Tampakan project.

COPPER: Benchmark copper touched a one-month high but ended unchanged at $5,880 a tonne.

The copper market faces a possible 320,000 tonne deficit this year, reversing to a surplus of 281,000 tonnes in 2020, the International Copper Study Group said.

OTHER PRICES: LME aluminium edged down 0.3% to $1,724 a tonne, zinc gained 0.9% at $2,491, lead touched its highest since July 2018 but ended barely changed at $2,225, and tin was up 1.3% at $16,770. (Reporting by Zandi Shabalala Additional reporting by Mai Nguyen Editing by David Holmes)


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