Nickel hits highest in nearly 9 months on Philippine supply concerns

LONDON: Nickel prices surged to their highest in nearly nine months on Monday on concern over supply from the Philippines, the leading exporter of the stainless steel raw material.

Copper and most other industrial metals also pushed higher after the central bank of top commodities consumer China injected fresh funds into the financial system.

"This remains a liquidity-driven market. Most investors are still expecting the Chinese economy to perform well in the future, so they see good reason to stick to the bullish side of the market," said Gianclaudio Torlizzi, a partner at Milan consultancy T-Commodity.

Three-month nickel on the London Metal Exchange (LME) had climbed 1.7% to $14,610 a tonne by 1600 GMT after touching $14,700, its strongest since Nov. 25.

Nickel ore output from the Philippines, the world's biggest exporter of the material, dropped 28% year on year to 102,310 tonnes by metal content over January-June, data showed.

Also supporting nickel were strong ShFE stainless steel futures, which climbed as much as 4.2% to 14,775 yuan a tonne. Most nickel is used as an alloy to make stainless steel.

The Yangshan copper premium, an indicator of Chinese physical demand, fell to $74 a tonne, its lowest since early April and down from $99 a month ago.

LME copper advanced 1.3% to $6,449.50 a tonne, though T-Commodity's Torlizzi was wary of the strong recent gains that have lifted the price by 48% since March and prompted him to take a short position.

"We think the risk of being long here is high and is very vulnerable to disappointment."

LME copper stocks sank to their lowest levels in more than 12 years at 110,000 tonnes.

LME zinc jumped 3.1% to $2,441.50 a tonne, its highest in nearly seven months, as aluminium rose 0.8% to $1,759.50.

Lead added 0.9% to $1,967.50 after touching $1,978, its strongest since Jan. 23, but tin shed 0.9% to $17,440.