Nickel climbs on higher risk appetite and demand boost

LONDON: Nickel rose to its highest in two weeks on Thursday on renewed risk sentiment after US inflation figures cooled talks of Fed tapering, while strong consumption and falling stocks underpinned the metal's appeal.

Benchmark nickel prices on the London Metal Exchange (LME) added 0.9% to $19,551 per tonne in official trading, headed for its third straight session of gains.

Meanwhile the most-traded September nickel contract on the Shanghai Futures Exchange closed 4.6% higher at 146,720 yuan ($22,667.16) a tonne.

"Nickel has one of the most positive short term fundamentals - there are a lot of signs of very good demand," said Citi analyst Oliver Nugent, adding that risk-on sentiment after US inflation data had also boosted prices.

Demand for nickel for making stainless steel, which accounts for the majority of its consumption, has soared, while refined output in top producer China fell 15.7% year-on-year between January and July and by 13.5% in July compared with June, state-backed research house Antaike said.

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Meanwhile on-warrant inventories of nickel in LME-registered warehouses fell to 149,388 tonnes, their lowest since March 2020.

In warehouses monitored by the Shanghai Futures Exchange, nickel stocks were near record lows touched in June at 6,707 tonnes.

Macquarie expects the nickel market to flip to a 100,000-tonne deficit this year from a surplus of a similar margin in 2020 due to higher Chinese demand and supply disruptions, analyst Jim Lennon said.

But nickel supply will likely start to overtake demand in the fourth quarter, which could weigh on prices, he added.

SPREADS: The discount of the LME cash nickel to the three-month price was at $24 a tonne compared with a $45 premium in June.

OTHER METALS: LME copper rose 0.3% to $9,539 a tonne, aluminium gained 0.6% to $2,600, zinc lost 0.6% to $3,025.50, lead edged up 0.8% to $2,338, while tin was up 0.2% to $35,708, after hitting a record.