LONDON: Nickel prices rose on Tuesday as worries about supplies from Indonesia resurfaced after China’s Tsingshan Group asked smelters at its Weda Bay industrial park to divert power to aluminium production. Benchmark nickel was up 2.3 percent at USD19,005 a metric ton by 1345 GMT.
It hit its highest in almost two years this month at USD20,000, with buying triggered by lower ore quotas in top producer Indonesia and an acute sulphur shortage stemming from the Iran war.
Tsingshan made the request to curb output last week to producers of nickel pig iron, used to make stainless steel, Reuters reported on Monday, as the group shifts focus to aluminium after stronger prices helped improve margins.
Both NPI and aluminium smelting consume large amounts of electricity. Market talk that Indonesia’s government was considering new export controls on strategic commodities to limit capital flows also helped to boost nickel prices.
Traders said reports that Indonesia had suspended nickel mining licences after companies failed to submit required 2026 plans had generated further momentum.
Aluminium prices, which are trading near four-year highs, have been propelled higher by disrupted supplies from the Middle East, which houses 9percent of global smelting capacity.
The closure of the Strait of Hormuz has also stalled shipments of aluminium to the United States and Europe and prevented feedstock from being delivered to Middle East smelters.
“Events in the Middle East have removed 4percent of global aluminium supply, with damage to facilities bringing an extended, 12-month, restart time frame for a large share of this,” Morgan Stanley analysts said in a note.
“With China hitting its smelting capacity cap and tight power markets constraining supply elsewhere, this pushes the market into a 1.85 million ton deficit for 2026 on our estimates.”
Shortages are behind the withdrawal of aluminium from LME-registered warehouses and large backwardation, or premiums, for near-term LME contracts against those with longer maturities.
Three-month aluminium was up 0.8percent at USD3,596 a ton, copper fell by 1.1percent to USD13,432, zinc slipped by 0.3percent to USD3,512, lead ceded 0.8percent to USD1,967 and tin retreated 1.3percent to USD51,860.
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