LONDON: Nickel prices touched their highest in more than two months on Thursday as some investors bet that a slide in the market had hit a floor on worries about supply from top producer Indonesia.
Three-month nickel on the London Metal Exchange rose 0.4% to $17,675 a metric ton by 1100 GMT after touching $17,830, its highest since Nov. 10.
LME nickel has rallied 8.6% this month, and is on track for its first monthly gain since July.
“People are asking, is the cost floor high enough now, have we reached a floor in nickel? It does feel like the super bearish narrative is being challenged,” said Dan Smith, head of research at Amalgamated Metal Trading.
Nickel was the worst performer last year among all LME base metals, falling by 45% due to softening demand and a steady rise in Indonesian output.
The most recent LME positioning data showed prices were being lifted on a combination of bearish speculators closing positions and a smattering of bullish inventors buying new ones, Smith added.
Short positions were cancelled last week on fears that nickel would be included in new Western sanctions against major producer Russia, but the sanctions did not mention the metal.
In top producer Indonesia, delays in approving new mining quotas prompted smelters to slow operations and curb output.
Smith was cautious, however, about further gains.
“If we head up to $18,000, $19,000 or even $20,000, you are going to see quite a wave of people selling into it and hedging. It’s difficult to think you’ll see a lot of upside.”
The most-traded May nickel contract on the Shanghai Futures Exchange climbed 1.7% to 137,710 yuan ($19,140) a ton. The contract is up 7.1% so far this month.
LME lead eased by 0.7% to $2,068.50 a ton after LME inventories jumped by 11,350 tons to their highest since May 2017.
Zinc shed 0.2% to $2,410.50 after LME stocks climbed to their highest since June 2021.
LME copper rose 0.2% to $8,465.50 a ton and aluminium advanced 0.7% to $2,205, while tin was little changed at $26,565.
All base metals except tin and nickel were set for monthly declines.
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