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Message: Nickel hits three-month peak on Indonesia concerns

Eric Onstad

LONDON — Nickel prices touched their highest in three months on Friday on worries that major producer Indonesia will resume an export ban on ore in 2022.

Indonesia relaxed the ban on nickel ore in 2017, but said at the time that it would last only five years and that exports would be restricted again in 2022.

Analyst Colin Hamilton at BMO Capital Markets in London said many people had been skeptical that the full ban would be reimposed, and a media report about sticking to the ban in 2022 created jitters in the market.

“Of course that wouldn’t affect today’s availability, but we’ve always been heavily dependent on Indonesia in this nickel market,” Hamilton said.

“If we were to see Indonesia restrict availability of their ore then it would tighten the market quicker than we’re factoring in.”

Most analysts expect rising demand for nickel in electric vehicles to create shortages in coming years.

Benchmark nickel on the London Metal Exchange was up 0.8% at $13,230 a tonne by 1400 GMT after earlier hitting $13,325, the strongest since April 8.

* COPPER IMPORTS: Chinese imports of unwrought copper fell 27.2% year on year in June as a slowdown in the world’s second-biggest economy continued to weigh on demand for the metal. Shipments of ores and concentrates slid 16.5%, data showed.

“That probably reflects availability more than anything else. Just look at the Chilean and Peruvian (mine output) data,” said Hamilton, referring to the fall in ore imports.

“There’s no tightness at the refined end of the market yet, but there’s a raw material constraint and you’d expect it to flow through the chain eventually.”

* CHINA TRADE: Also weighing on the metals market was disappointing wider trade data from top metals consumer China.

China’s overall exports fell in June as the United States ramped up trade pressure, while imports shrank more than expected, pointing to further weakness in the world’s second-largest economy and slackening global growth.

* DOLLAR: The dollar index pared losses after U.S. producer prices rose slightly in June, pointing to moderate inflation. A weaker dollar often boosts metals prices, making them cheaper for buyers using other currencies.

* TIN SPREAD: LME cash tin’s discount to the three-month contract moved to $48 a tonne, the strongest since February 2017, against a premium of $230 in mid-June. This follows a sharp rise in LME tin inventories, evidence of ample supplies of the metal.

* PRICES: Three-month LME copper fell 0.4% to $5,933 tonne, giving up gains after touching $5,998, the highest since July 1.

Aluminum slipped 0.3% to $1,822 a tonne, zinc shed 0.3% to $2,420, lead added 0.2% to $1,977 and tin gave up 1.3% to $18,105.

Source: https://business.financialpost.com/pmn/business-pmn/nickel-hits-three-month-peak-on-indonesia-concerns

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