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Nickel Prices Rise to 11-Month High on Indonesia, Russia Concern

By Claudia Carpenter , 2014-05-12 12:00:00

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Nickel prices, poised to enter a bull market, climbed to the highest since April on speculation that Russian faces more political sanctions, exacerbating supply concerns after Indonesia banned unprocessed ore exports.

Russia’s move to annex Ukraine’s Crimea will be met with global opposition and result in isolation, U.S. Vice President Joe Biden said today. The U.S. and the European Union yesterday imposed a round of sanctions. Indonesia, the world’s biggest miner of nickel used to make stainless steel, banned shipments of unprocessed ore on Jan. 12.

The price of the metal has climbed 16 percent this year as Indonesia’s ban curbed supply of the raw material used by China in nickel pig iron. OAO GMK Norilsk Nickel, Russia’s largest mining company, accounts for 17 percent of world output, according to Morgan Stanley. The global surplus will narrow to 68,000 metric tons this year from 207,000 tons in 2013, Barclays Plc forecast on Feb. 12.

“Comments from the rest of the world leaders just add to continued concerns about potential trade sanctions against Russia and supply constraints for nickel,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. “We still have the Indonesia supply concerns and the underlying demand continues to be there.”

Nickel for delivery in three months advanced 1.9 percent to $16,180 a ton at 4:15 p.m. on the London Metal Exchange. The metal earlier reached $16,235, the highest since April 12.

The price was poised to post a gain at the settlement topping 20 percent from a Nov. 27 closing low, entering a bull market.

Premiums Jump

Premiums added to LME immediate-delivery prices for nickel full plates in Europe jumped 73 percent last week to $65 a ton, the highest since July 2012, according to Metal Bulletin data. Surcharges for cut material and briquettes in the region are at the highest in two years.

Orders to withdraw the metal from warehouses, or canceled warrants, climbed to a record yesterday and are up 31 percent this year.

“There has been a lot of consumer buying over the last week,” David Wilson, an analyst at Citigroup Inc. in London, said in a telephone interview. “Premiums have surged in the last week. It’s got more to do with that than any concern over Russia. No one is talking about trade sanctions.”

Copper for delivery in three months rose 0.2 percent to $6,491 a ton ($2.94 a pound) on the LME. Aluminum, zinc, lead and tin gained in London.

On the Comex in New York, copper futures for May delivery gained 0.2 percent to $2.9565 a pound.

 

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