LONDON: Nickel prices on Wednesday shot to their highest since 2011 as a supply shortage forced traders to pay huge premiums to get their hands on metal.
Benchmark nickel on the London Metal Exchange (LME) was up 5% at $23,170 a tonne at 1707 GMT after reaching $23,220.
It was heading for its biggest one-day gain since October.
Used in stainless steel and for batteries for electric vehicles, nickel is up around 11% this year after rising 25% in 2021 and 18% in 2020.
With exchange stockpiles falling, the tom/next and cash-to-three-month spreads surged to their highest in more than 10 years this week, prompting the LME to say it was monitoring the market. Premiums eased on Wednesday.
“We’re bullish for nickel,” said Sucden analyst Geordie Wilkes. “We could see some softness in the near term but that’s nothing to worry about when you look at the fundamentals.”
INVENTORIES: Stocks in LME-registered warehouses have fallen to 94,830 tonnes from more than 260,000 tonnes in April.
Inventories in Shanghai Futures Exchange warehouses, at 4,711 tonnes, are near record lows.
COLUMN: The nickel market is experiencing a severe squeeze, writes Reuters columnist Andy Home.
CHINA: The central bank of China, the biggest metals consumer, will roll out more policy measures to stabilise the economy, vice governor Liu Guoqiang said.
ALUMINIUM: LME aluminium was up 0.7% at $3,046.50 a tonne after reaching $3,053, the highest since Oct 21. Prices are up 8% percent this year after rising 42% in 2021.
Higher power prices have forced smelters to cut output, tightening the market.
“The past three months saw a ~800kt/y of European smelting capacity curtailed, with up to 1.2Mt/y of smelting capacity at risk over the next few months,” said analysts at Citi.
“We are very bullish aluminium and copper over the medium term,” they said.
TIN: LME tin was up 1.5% at $42,925 a tonne after touching an all-time high of $43,000. Prices are up around 10% this year after rising 92% in 2021.
Indonesia, the second biggest producer, has yet to issue any permits to export tin in 2022 via ICDX, one of its commodity exchanges, a bourse official said.
OTHER METALS: LME copper was up 1.6% at $9,831.50 a tonne, zinc was 0.5% higher at $3,585 and lead rose 1.7% to $2,362.