Shanghai nickel hits three-month high on supply worries

BEIJING: Shanghai nickel extended gains on Wednesday to hit a three-month high, underpinned by mounting worries about supply loss after China’s Huayou cut output at its Indonesian unit.

The most-traded nickel contract on the Shanghai Futures Exchange was up 1.53% at 151,040 yuan ($22,090.27) per metric ton, as of 0118 GMT.

It hit the highest since January 26 at 152,230 yuan earlier in the session.

Benchmark three-month nickel on the London Metal Exchange was up 0.13% at $19,475 per ton.

The contract hit a nearly two-year high at $19,565 on Tuesday.

Nickel prices have already been supported by rising concerns over supply cuts due to lower production quota in Indonesia, while costs have increased because of a shortage of sulphur stemming from the Middle East conflict.

Zhejiang Huayou Cobalt said on Tuesday that its Indonesian unit would temporarily halt some production lines from May 1, slashing about half of the plant’s output, after rising sulphur prices lifted costs at one of its key battery-nickel projects.

Indonesian HPAL producers, representing 14% of global supply, are facing challenges from rising sulphur prices and tightening supplies, keeping prices skewed to the upside, analysts at Morgan Stanley said in a note.

Among other SHFE metals, copper fell 1.15%, aluminium dipped 0.45%, lead shed 0.18%, tin lost 0.7%, and zinc dropped 0.52%.

Among other LME metals, copper was little changed, aluminium was flat, lead lost 0.1%, zinc slid 0.28% while tin added 0.13%.