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METALS-Nickel jumps 8 pct on supply concern, copper hits 2-month top
May 12, 2014 / 11:06 AM / 4 years ago

METALS-Nickel jumps 8 pct on supply concern, copper hits 2-month top

* Nickel gains 50 pct in 2014 on supply woes

* Copper hits 2-month peak on China hopes, tight inventories

* Coming Up: U.S. Federal budget April at 1800 GMT (Updates with new session high in electronic trading)

By Maytaal Angel and Harpreet Bhal

LONDON May 12 (Reuters) - Nickel jumped 8 percent on Monday, bringing gains for the year to 50 percent, as the threat of tougher Western sanctions on the world’s biggest producer Russia compounded concerns about Indonesia’s ban on unprocessed ore exports.

Copper hit a two-month peak on top copper consumer China’s pledge on Friday to push ahead with a broad range of capital market reforms and on growing worries about dwindling global exchange inventories.

In wider markets, global equities advanced cautiously as investors braced for a possible escalation in Ukraine’s civil conflict after pro-Moscow rebels declared victory in a referendum on self-rule.

Western leaders have threatened more sanctions against Russia in the key areas of energy, financial services and engineering if Moscow disrupts a presidential election planned in Ukraine on May 25.

The threats have boosted nickel on fears that an increasingly out of control conflict might eventually result in sanctions against Russia’s Norilsk Nickel, a top nickel producer.

Nickel buyers are already scrambling to secure supplies on fears that the global market will fast move into deficit due to Indonesia’s ban in January on unprocessed ore exports.

LME nickel struck a session high of $21,468 a tonne in electronic trading, its highest level since February 2012 and up almost 8 percent from Friday’s close. It was bid at $20,900 a tonne at the closing ring.

Nickel is trading 50 percent higher so far this year.

“People are trying to work out where they’re going to get supply of nickel ore. There’s a perception that over the next 6-12 months there will be a substantial deficit, so the market has a natural momentum and it’s hard to stand in the way of that,” said Nic Brown, head of commodities research at Natixis.

The price of nickel ore from the Philippines has more than doubled since late February, as supplies have dried up from rival producer Indonesia, previously the world’s biggest exporter.

A shutdown of Vale’s New Caledonian nickel operations after an effluent spill late last week has also increased nickel buying even though the shutdown is expected to be short-lived.

LME copper climbed to $6,895 a tonne, its highest since March 7 in intraday trade. It closed up 2 percent at $6,879 a tonne.

Daily LME data showed copper stocks MCUSTX-TOTAL in official warehouses fell 3,000 tonnes to 205,325 tonnes, their lowest since October 2008. Separate data on Friday showed Shanghai stocks CU-STX-SGH are at 90,580 tonnes, their lowest since December 2011.

Investors are looking for a pick-up in demand from top consumer China to push copper prices higher. China accounts for 40 percent of global refined copper demand.

Recent factory surveys pointed to initial signs of stabilisation in the world’s second-largest economy as the government uses targeted measures, including accelerated spending on railways and affordable housing, to underpin growth.

“Investors clearly seem to be hoping that the Chinese government will be more aggressive in responding to the (economic) weakness that is now more evident in broad swaths of the economy,” said Ed Meir, analyst at INTL FCStone.

Investors are also banking on more policy support from the U.S. and euro zone central banks. Dovish comments from Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi last week underpinned risk assets around the globe.

In other metals, aluminium ended 1.4 percent higher at $1,786 a tonne, zinc ended up 2.2 percent at $2,080, lead closed 2 percent higher at $2,125.50 and tin ended 0.8 percent lower at $22,975 a tonne.

In industry news, wait times to get metal out of warehouse firms owned by trade house Glencore and bank Goldman Sachs stretch up to two years, according the LME’s first report detailing backlogs at its global network of depots.


Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Three month LME tin

$1 = 6.2280 Chinese Yuan Additional reporting by Melanie Burton in Sydney; editing by Susan Thomas and David Evans

Our Standards:The Thomson Reuters Trust Principles.
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