LONDON: Aluminium and nickel prices climbed towards multi-year highs on Monday on escalating fears that reduced supplies from Russia would exacerbate existing shortages of both industrial metals.
A Russian invasion of Ukraine could mean sanctions against Russian companies such as Norilsk Nickel, which supplies about 10% of the world’s nickel, and Rusal, which accounts for about 5% of global aluminium supply.
Russia has repeatedly denied it is preparing to invade Ukraine.
Benchmark aluminium on the London Metal Exchange (LME) was up 2.4% at $3,212 a tonne by 1702 GMT, retreating from an earlier high of $3,241 after Russian Foreign Minister Sergei Lavrov urged President Vladimir Putin to allow more time for diplomacy on the Ukraine crisis.
“There’s a risk of sanctions on Russia; people are trying to stock up on aluminium and nickel,” one metals trader said.
Aluminium prices hit $3,333 a tonne last week, close to the record high of $3,380.15 hit in July 2008.
Nickel gained 0.6% to $23,190 a tonne, also ceding some early gains. It touched $24,435 a tonne in January for its highest since August 2011.
STOCKS: Shortages can be seen in dwindling inventories in LME-registered warehouses.
Aluminium stocks at 868,950 tonnes have more than halved since March last year. Cancelled warrants — metal earmarked for delivery — at 30% suggest THAT more aluminium will be delivered out over coming days and weeks.
Nickel inventories at 84,894 tonnes have dropped by 67% since April last year, while cancelled warrants stand at 50%.
SPREADS: Worries about supplies on the LME market have seen cash aluminium and nickel trade at a premium over the three-month contracts for some time.
SHANGHAI: Norilsk Nickel’s cathode is deliverable against the nickel contract traded on the Shanghai Futures Exchange (ShFE). The contract, too, has rallied in recent days.
DOLLAR: Prices of copper used by investors as a gauge of economic health was up 0.5% at $9,908 a tonne.
Worries about demand in top consumer China and a stronger US currency are weighing on copper. A stronger dollar makes metals priced in the currency more expensive for buyers with other currencies.
OTHER METALS: Zinc slipped 1.2% to $3,581 a tonne, lead rose 0.5% to $2,290 and tin was flat at $43,549.